Wyndham Turns Down Unsolicited Proposal from Choice

Wyndham Hotels & Resorts announced that its Board of Directors unanimously rejected a highly conditional, unsolicited stock-and-cash proposal by Choice Hotels International, Inc. to acquire all outstanding shares of Wyndham.

Wyndham's Board of Directors, together with its financial and legal advisors, closely reviewed Choice's latest proposal with a nominal value of $90 per share, comprised of 45 percent in stock and 55 percent in cash and determined that it is not in the best interest of shareholders to accept the proposal.

In rejecting Choice's proposal, the Wyndham Board of Directors determined that:

• the proposed transaction involves significant business and execution risks, including an extended regulatory timeline and uncertainty of outcome, potential franchisee churn, and excessive leverage levels at the pro forma combined company
• the consideration mix includes a significant component of Choice stock, which the Board believes is fully valued relative to Choice's growth prospects, especially when compared to Wyndham
• the offer is opportunistic and undervalues Wyndham's future growth potential

"Choice's offer is underwhelming, highly conditional, and subject to significant business, regulatory and execution risk.  Choice has been unwilling or unable to address our concerns," said Stephen P. Holmes, Chairman of the Wyndham Board of Directors.  "While our Board would support a value-maximizing transaction, given the substantial, unmitigated embedded risks and value destruction potential presented by the proposed transaction, our Board determined it is not in the best interests of Wyndham shareholders.  We have engaged with Choice and its advisors on multiple occasions to explore these risks.  However, it became clear the proposed transaction likely would take more than a year to even determine if, and on what terms, it could clear antitrust review, and Choice was unable to address these long-term risks to Wyndham's business and shareholders. We are disappointed that Choice's description of our engagement disingenuously suggests that we were in alignment on core terms and omits to describe the true reasons we have consistently questioned the merits of this combination – Choice's inability and unwillingness to address our significant concerns about regulatory and execution risk and our deep concerns about the value of their stock."

Wyndham's Board believes that during the long period between announcement and closing or termination of the transaction, Wyndham shareholders would be exposed to the threat of significant long-term deterioration of Wyndham's brand equity, franchisee churn, and impaired integration execution at the combined company in which Wyndham shareholders would have significant interest.

In addition, the significant amount of debt required to fund the cash portion of the deal would result in the combined company's net leverage being over 6x adjusted EBITDA. This above-market leverage would increase execution risk and restrict the balance sheet flexibility of the combined company, putting downward pressure on future growth potential, share price and valuation multiples. As a result, the value creation from cost synergies may not be fully realized.

Wyndham's Board also has significant questions and concerns about the value of Choice's stock.  Choice's latest offer includes 45% in Choice stock, which Wyndham's Board believes is fully valued. Industry experts unequivocally share the view of Choice being fully valued, with over three-quarters of research analysts having Choice at a Sell or Hold rating.   Wyndham's Board sees Choice's offer as an attempt to mask their anemic organic growth and believes Wyndham shareholders are better positioned owning Wyndham's stock, which has significant upside relative to Choice's fully valued stock.