Wyndham Board Cites Antitrust Risk in Choice Hostile Bid

TL;DR

**Wyndham's Board is pushing back hard on Choice's hostile bid, citing major antitrust risks for shareholders.**

AI Summary

Wyndham Hotels & Resorts, Inc. (NYSE: WH) filed a DEFA14A on January 4, 2024, to inform investors about its ongoing concerns regarding an unsolicited takeover approach from Choice Hotels. Wyndham's Board of Directors is worried that its stockholders would not be fairly compensated for the significant and uncertain antitrust risks associated with an extended regulatory review. This matters to investors because it highlights the Board's commitment to protecting shareholder value against a potentially risky acquisition, suggesting a prolonged battle or a need for Choice to sweeten its offer.

Why It Matters

This filing signals Wyndham's strong resistance to Choice's unsolicited offer, primarily due to antitrust concerns, which could lead to a protracted legal battle or a revised, potentially higher, offer from Choice.

Risk Assessment

Risk Level: high — The filing explicitly mentions 'asymmetrical risk' and 'uncertain outcome' due to an 'extended antitrust review,' indicating significant regulatory hurdles and potential for a deal to fall apart.

Analyst Insight

Investors should monitor further communications from both Wyndham and Choice, particularly regarding any revised offers or antitrust concessions, as the current filing indicates a strong likelihood of a protracted and potentially unsuccessful takeover attempt under current terms.

Key Players & Entities

• Wyndham Hotels & Resorts, Inc. (company) — the registrant and target of an unsolicited approach
• Choice (company) — the company making an unsolicited approach and hostile exchange offer
• Wyndham Board of Directors (person) — expressed concerns about antitrust risks and retained counsel
• April 2023 (date) — when Choice's unsolicited approach began
• January 4, 2024 (date) — date of the DEFA14A filing

Forward-Looking Statements

• Choice Hotels will need to significantly increase its offer or provide substantial antitrust protection to acquire Wyndham. (Choice Hotels) — medium confidence, target: Q2 2024
• The acquisition process will be prolonged due to regulatory scrutiny and Wyndham's resistance. (Wyndham Hotels & Resorts, Inc.) — high confidence, target: Q4 2024

FAQ

Filing Documents

• ny20016614x4_defa14a.htm (DEFA14A) — 49KB
• 0001140361-24-000729.txt ( ) — 50KB

From the Filing

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant Filed by a Party other than the Registrant Check the appropriate box: Preliminary Proxy Statement Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) Definitive Proxy Statement Definitive Additional Materials Soliciting Material under Sec.240.14a-12 Wyndham Hotels & Resorts, Inc. (Name of Registrant as Specified In Its Charter) (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check all boxes that apply): No fee required. Fee paid previously with preliminary materials. Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 On January 4, 2024, Wyndham Hotels & Resorts, Inc. made the following materials available to investors. THE REAL ANTITRUST STORY Since Choice's unsolicited approach in April 2023, the Wyndham Board of Directors consistently has expressed concerns that Wyndham stockholders would not be adequately compensated for the asymmetrical risk an extended antitrust review with an uncertain outcome would cause. Choice, for its part, has been consistently dismissive of these concerns and unwilling to offer adequate protections and compensation for these risks. Taking its responsibilities seriously, the Wyndham Board retained outside regulatory counsel and an economist enabling it to both understand the nature of the issues and the magnitude of the significant risks. These conclusions were shared early in the process with Choice. Yet Choice and its advisors minimized the regulatory issues throughout the entire period of discussion with Wyndham. Following Choice's unilateral decision to launch a hostile exchange offer, Wyndham was required under SEC rules to provide a public response and recommendation to its shareholders, including addressing antitrust issues directly and transparently. The Wyndham Board's assessment was and continues to be affected by a number of recent and evolving developments including: The broader regulatory context of unprecedented antitrust enforcement, including the publication of the final 2023 Merger Guidelines that treat combined market shares of over 30% as presumptively illegal; The FTC's initiation of a detailed investigation of the potential combination following Choice's October 17 public disclosure of its unsolicited approach before there was an exchange offer or transaction to evaluate (a very unusual move signaling significant interest in the transaction); Strong public opposition from Wyndham's franchisees who are at the core of our business model. Indeed, the majority of our owners, who are members of the Asian American Hotel Owners Association ( AAHOA ), have expressed vehement opposition to the deal. After Choice launched its hostile bid, AAHOA fielded and published a survey of its members confirming this strident opposition; Continued counsel (including from a second major law firm) along with advice from a data-driven economic consulting firm, confirming the Wyndham Board's concerns are well-founded around the timeline and outcome. The timeline below explains the evolution of the approach taken by the Wyndham Board to understand and appreciate these significant risks, which the Board felt had to be made public for all to assess properly the merits of the proposed transaction . The Wyndham Board remains open, as it has consistently demonstrated throughout this process, to considering any proposal that addresses its concerns on value, deal certainty and adequately protects and compensates shareholders for the significant, evolving risks and uncertainty associated with the anti-trust review process. 1 ## Chronology of Antitrust Assessment and Engagement June to August – Wyndham Expressed its Concerns: In at least four in-person and telephonic meetings, Mr. Holmes communicated repeatedly to Mr. Bainum Wyndham's view of the regulatory outlook and serious risks relating to the proposed transaction. Mr. Bainum remained consistently dismissive of concerns regarding any regulatory risk and suggested that Choice's advisors believed the transaction would be cleared by the FTC without an extended review, though offered nothing to support that conclusion. July – FTC and DOJ Release Draft Merger Guidelines: Consistent with recent speeches and a more active regulatory agenda generally (including an increase in the number of so-called "Second Requests" issued), the FTC and DOJ released draft Merger Guidelines that dramatically and formally lowered thresholds for transactions that would be presumed illegal, signaling continued heightened enforcement ahead. Among other signals that heightened and vigorous enforcement of transactions is coming, the draft Guidelines stated that combined market shares of over 30% would be deemed to be pr

View Full Filing

View this DEFA14A filing on SEC EDGAR