(Updated: March 11, 2024 8:21 a.m. EST)
Choice Hotels International (NYSE:) announced Monday that it is canceling its bid to acquire all outstanding shares of Wyndham Hotels & Resorts (NYSE:).
In addition to terminating the offering, Choice is withdrawing its nomination of independent director candidates for election at Wyndham’s 2024 annual meeting.
Moreover, Choice’s board of directors also decided to expand its share repurchase program by an additional five million shares, increasing the total number of shares available for repurchase to approximately 6.8 million.
The failed exchange offer, initiated in April 2023 as part of Choice’s strategy to bring Wyndham into the negotiations, was accompanied by several increased offers and additional concessions by Choice.
However, the hotel franchisee said Wyndham’s board of directors had demonstrated “apparent continued disinterest in the combination,” prompting the company not to renew its exchange offer.
The offering expired on March 8, 2024, and WH Acquisition Corporation, a wholly owned subsidiary of Choice Hotels, did not acquire any Wyndham shares in the offering.
Jefferies analysts twice upgraded CHH shares from “underperform” to “buy” following the company’s decision to end its hostile bid.
“The stock is now returning to strong housing fundamentals as deal risk has been mitigated and should return at least historical average normalized valuation of ~16X 2024E EBITDA versus 13.4X currently, versus SMID and large cap real estate at 14 ,0X and 17.4. X,” the analysts said.
“In our updated model, we expect underlying revenue growth of 3% and EPS growth of 8%,” they wrote.
Jeffries also raised his target price for CHH to $156 from $96, which represents about 29% of Friday’s closing price.