Choice Hotels offered to buy rival Wyndham Hotels and Resorts for $7.8 in a hostile takeover bid just weeks after Wyndham left the negotiating table.
Choice offered to acquire Wyndham – which encompasses 24 brands including Super8, Travelodge and Days Inn – at $90 per share in cash and stock, the company said on Tuesday.
In total, the proposal has a total value of roughly $7.8 billion. Including Wyndham's debt, the deal is valued at $9.8 billion.
The deal is a 30% premium from Wyndham's closing stock price on Monday.
Signage is displayed outside the Days Inn by Wyndham Wild Wild West Gambling Hall & Hotel in Las Vegas, Nevada, on July 26, 2020. (Roger Kisby/Bloomberg via Getty Images / Getty Images)
The company said the deal will benefit both companies' stakeholders, including franchisees, shareholders, associates, and guests, "that will be particularly significant in the current uncertain economic climate."
"We have long respected Wyndham's business and are confident that this combination would significantly accelerate both Choice's and Wyndham's long-term organic growth strategy for the benefit of all stakeholders," Choice added.
Choice Hotels CEO Patrick Pacious said in a statement that both companies were working on a deal to combine the affordable hotel companies for nearly six months before Wyndham cut off talks a "few weeks ago." As a result, Choice decided to make its bid public.
"We were therefore surprised and disappointed that Wyndham decided to disengage," Pacious said, adding that "while we would have preferred to continue discussions with Wyndham in private, following their unwillingness to proceed, we feel there is too much value for both companies' franchisees, shareholders, associates, and guests to not continue pursuing this transaction."
Signage is displayed outside La Quinta Inn & Suites by Wyndham hotel in Las Vegas, Nevada, on July 26, 2020. (Roger Kisby/Bloomberg via Getty Images / Getty Images)
Choice initially proposed to acquire Wyndham in April for $80 per share in cash and stock, but "Wyndham rejected the proposal and refused to engage in further discussions," the company said.
Choice decided to increase its proposal to $85 per share and then $90 per share as board members and executives from both companies met. However, last month, Wyndham raised concerns over regulatory approvals, according to Choice.
Representatives for Wyndham did not respond to FOX Business' request for comment.