Wyndham board deems Choice Hotels’ new offer “a step backwards”

(Reuters) – U.S. budget hotel operator Wyndham Hotels and Resorts said on Tuesday a new letter from Choice Hotels (NYSE:) “represents a step backwards” and the terms outlined are not in the best interests of Wyndham or its shareholders.

After months of negotiation between the budget hotel owners, Wyndham’s board received a letter from Choice CEO Patrick Pacious on Nov. 14, seeking a restart to talks.

Choice in the letter has not boosted its cash-and-stock offer, currently worth $86 a share, which is down from $90 per share offer after a decline in Choice’s shares since the takeover offer was made public in October.

“Choice continues to ignore our major concerns around value, consideration mix, and asymmetrical risk to our shareholders given the uncertainty around regulatory timeline and outcome,” Stephen Holmes, Chairman of Wyndham’s board said on Tuesday.

Pacious’ latest letter proposes an about 6% reverse-termination fee and a two-year deadline to obtain regulatory approvals.

Wyndham said the deal would both create “a prolonged period of limbo” for its employees and shareholders.

Choice had made a $7.8 billion cash-and-stock acquisition offer worth $49.50 in cash and 0.324 shares of its common stock for each share of Wyndham.

It said it first approached Wyndham in April with an $80 per share offer, which it later bumped up to $85 and then to $90 per share.

“We believe the latest rejection is an unequivocal demonstration of the Wyndham..management team’s entrenchment as they continue to fail to.. meaningfully explore a transaction that would deliver significant value to Wyndham shareholders,” Choice said in a statement on Tuesday.

A potential merger would have married Choice Hotels’ brands such as Econo Lodge, Quality Inn and Clarion with Wyndham’s Days Inn and Travelodge, offering inflation-hit customers a wide choice of affordable hotels.