Excerpt from Yahoo
Choice Hotels CEO Pat Pacious is ready to book a stay inside the boardroom of budget hotel rival Wyndham to conduct some due diligence.
Pacious told Yahoo Finance Live on Thursday his company's offer to buy Wyndham is strong and has the support of institutional investors on both sides.
To be sure, Choice's hostile play to buy the much larger Wyndham is shaping up to be a classic merger barnburner.
After months of discussions on a combination, which began in April according to documents, Choice went public on Tuesday with its bid to purchase Wyndham after talks broke down several weeks ago.
Choice offered $7.8 billion to buy Wyndham, or $90 a share in a mix of cash and stock. Since the announcement, Choice shares have dropped 8.9%. Wyndham has gained 7.6% to $74 — well below the offer price by Choice — on uncertainty regarding a possible tie-up.
The company initially offered $80 a share in April to buy Wyndham, then lifted the price to $85 a few months later.
Choice contends $90 a share is its best and final offer.
The company says it's in contact with investment banks to fund a combination that will bring Howard Johnson and Super 8 (Wyndham, with 9,300 total locations) and Comfort and Quality Inn (Choice, 7,500 locations) under one umbrella.
Pacious says he expects executives at Wyndham to return to the negotiating table. They have not reconnected in the two days since the offer was made public, Pacious added.
Greater scale would give the combined company more than 16,800 locations worldwide, 160 million loyalty members, and $150 million in cost synergies, Choice says. The combination would allow the new entity to better compete with behemoths Marriott and Hilton for economy and business travelers.
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