Wyndham Confirms Receipt of Expansive FTC Second Request Under HSR Act for Choice's Unsolicited Hostile Offer to Acquire Wyndham
- Wyndham is the world's largest hotel franchising company with approximately 9,100 hotels spanning more than 95 countries.
- The company will continue to execute its standalone strategy with a focus on providing shareholders with long-term, sustainable value.
- The Second Request from the FTC marks the start of a complex, lengthy process with an uncertain outcome and no guarantee of closing.
- The prolonged review process could substantially reduce the value of Choice's offer and disrupt Wyndham's business.
Insights
The issuance of a 'Second Request' by the Federal Trade Commission (FTC) in the context of an acquisition proposal is a significant event. This request is indicative of a detailed and thorough examination of the proposed deal's antitrust implications. The fact that such requests are issued in only around 1% of deals underscores the seriousness with which the FTC is approaching this case.
The potential acquisition of Wyndham by Choice Hotels International represents a consolidation in the hotel franchising market, which may have implications for competition. The FTC's scrutiny could lead to an extended review period, creating uncertainty for both Wyndham and Choice shareholders. During this time, there may be a chilling effect on Wyndham's stock as the market reacts to the possibility of regulatory hurdles or even a blocked transaction. This could also impact Choice's financial planning and share performance, given the resources committed to pursuing the acquisition.
For the industry, this serves as a reminder of the stringent regulatory environment governing mergers and acquisitions, particularly in sectors where market concentration is a concern. Companies in similar situations might face delays, incur additional costs and experience operational disruptions during such extended reviews.
The financial implications of an extended regulatory review for a proposed acquisition are multifaceted. For Wyndham shareholders, there is the risk that the value of Choice's offer could diminish over time, especially if the regulatory process drags on or if market conditions change. This 'asymmetrical risk' refers to the potential for Wyndham shareholders to experience negative outcomes without a corresponding potential for positive gains of equal magnitude. The uncertainty surrounding the deal's completion could lead to volatility in Wyndham's stock price.
Additionally, the cost of compliance with the FTC's Second Request should not be overlooked. The process of gathering and submitting terabytes of data and documents is resource-intensive and could divert management's attention from their core business operations, possibly affecting Wyndham's financial performance in the short term.
Investors and analysts will be closely monitoring the situation, as these developments could have implications for Wyndham's future earnings and growth trajectory. The role of the advisors, including Deutsche Bank Securities Inc. and PJT Partners, will be critical in navigating the financial complexities of the situation and in advising Wyndham on the potential financial outcomes of the extended review.
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 establishes the procedures for pre-merger notification and antitrust review. The extension of the waiting period due to the Second Request can be seen as a procedural step, but it also signals the possibility of substantive legal challenges ahead. The FTC's focus on defining the relevant market indicates that they are considering how the proposed acquisition could impact competition within the hotel franchising sector.
While Wyndham has stated its intention to comply fully with the FTC's request, the outcome of the review is uncertain. The legal teams at Kirkland & Ellis LLP and Arnold & Porter Kaye Scholer LLP will play a crucial role in guiding Wyndham through the complex legal landscape of antitrust regulation. Their expertise will be pivotal in addressing the FTC's concerns and in advocating for the transaction's approval, or alternatively, in preparing for any legal challenges that may arise if the FTC moves to block the deal.
Understanding the nuances of antitrust law and the potential for a protracted legal battle is essential for stakeholders. The legal ramifications of this extended review process could have long-lasting effects on the company's strategic options and its competitive position in the market.
Extended Regulatory Review Certain
Offer Continues to Undervalue Wyndham and Exposes Wyndham Shareholders to Significant Asymmetrical Risk
"From the beginning, Wyndham has consistently stated that this transaction would be subject to an FTC Second Request, and therefore the FTC's decision to issue one is no surprise," said Stephen P. Holmes, Chairman of the Board. "Choice, on the other hand, continues to ignore the significant risk this poses to our shareholders, and mischaracterize how the FTC will define the relevant market. The protracted review process – with an unpredictable timeline and outcome – would substantially reduce the value of Choice's offer and disrupt Wyndham's business."
Holmes continued, "The Second Request, which is issued in only around
Wyndham will comply fully with the FTC's Second Request as required by law. The effect of the Second Request is to extend the 30-day waiting period imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Independent third parties share Wyndham's concerns. View additional support at https://www.staywyndham.com/additional-support/.
Advisors
Deutsche Bank Securities Inc. and PJT Partners are serving as financial advisors and Kirkland & Ellis LLP and Arnold & Porter Kaye Scholer LLP are legal advisors to Wyndham.
About Wyndham Hotels & Resorts
Wyndham Hotels & Resorts (NYSE: WH) is the world's largest hotel franchising company by the number of properties, with approximately 9,100 hotels across over 95 countries on six continents. Through its network of approximately 858,000 rooms appealing to the everyday traveler, Wyndham commands a leading presence in the economy and midscale segments of the lodging industry. The Company operates a portfolio of 24 hotel brands, including Super 8®, Days Inn®, Ramada®, Microtel®, La Quinta®, Baymont®, Wingate®, AmericInn®, Hawthorn Suites®, Trademark Collection® and Wyndham®. The Company's award-winning Wyndham Rewards loyalty program offers approximately 105 million enrolled members the opportunity to redeem points at thousands of hotels, vacation club resorts and vacation rentals globally. For more information, visit www.wyndhamhotels.com. The Company may use its website as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Disclosures of this nature will be included on the Company's website in the Investors section, which can currently be accessed at https://investor.wyndhamhotels.com. Accordingly, investors should monitor this section of the Company's website in addition to following the Company's press releases, filings submitted with the Securities and Exchange Commission and any public conference calls or webcasts.
Important Additional Information
This press release is not an offer to purchase or a solicitation of an offer to sell any securities or the solicitation of any vote or approval. Wyndham Hotels & Resorts, Inc. ("Wyndham" or the "Company") has filed with the
The Company intends to file a proxy statement and accompanying WHITE proxy card with the SEC with respect to the Company's 2024 Annual Meeting of Stockholders (the "2024 Annual Meeting"). The Company's stockholders are strongly encouraged to read such proxy statement, the accompanying WHITE proxy card and other documents filed with the SEC carefully in their entirety when they become available because they will contain important information. The Company's stockholders will be able to obtain any proxy statement, any amendments or supplements to the proxy statement and other documents filed by the Company with the SEC free of charge at the SEC's website at www.sec.gov. Copies will also be available free of charge at the Company's website at https://investor.wyndhamhotels.com.
Certain Information Concerning Participants
Wyndham and certain of its directors and executive officers may be deemed to be participants in the solicitation of proxies under the rules of the SEC. Information regarding the Company's directors and officers and their respective interests in the Company by security holdings or otherwise is available in its most recent Annual Report on Form 10-K filed with the SEC on February 16, 2023 and its most recent definitive Proxy Statement on Schedule 14A filed with the SEC on March 28, 2023. To the extent holdings of the Company's securities have changed since the filing of the Company's most recent Annual Report on Form 10-K or the Company's most recent definitive Proxy Statement on Schedule 14A, such changes have been reflected on Statements of Change in Ownership on Form 4 filed with the SEC. Updated information relating to the foregoing will also be set forth in the Company's proxy statement and other materials to be filed with the SEC for its 2024 Annual Meeting. These documents can be obtained free of charge from the sources indicated above.
Cautionary Statement on Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including statements related to the offer. Wyndham claims the protection of the Safe Harbor contained in the Private Securities Litigation Reform Act of 1995 for forward-looking statements. Forward-looking statements include those that convey management's expectations as to the future based on plans, estimates and projections at the time Wyndham makes the statements and may be identified by words such as "will," "expect," "believe," "plan," "anticipate," "intend," "goal," "future," "outlook," "guidance," "target," "objective," "estimate," "projection" and similar words or expressions, including the negative version of such words and expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Wyndham to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of hereof.
Factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation: factors relating to the offer; general economic conditions, including inflation, higher interest rates and potential recessionary pressures; the effects from the coronavirus pandemic, including the impact on Wyndham's business, as well as the impact on its franchisees, guests and team members, the hospitality industry and overall demand for and restrictions on travel; the performance of the financial and credit markets; the economic environment for the hospitality industry; operating risks associated with the hotel franchising business; Wyndham's relationships with franchisees; the impact of war, terrorist activity, political instability or political strife, including the ongoing conflicts between
Contacts
For investor inquiries, contact:
Matt Capuzzi
Senior Vice President, Investor Relations
T: 973.449.1537
matthew.capuzzi@wyndham.com
For media inquiries, contact:
Máire Griffin
Senior Vice President, Global Communications
T: 862.246.9918
maire.griffin@wyndham.com
Danya Al-Qattan / Paul Scarpetta / Stephen Pettibone
FGS Global
Wyndham@fgsglobal.com
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SOURCE Wyndham Hotels & Resorts
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