Madison Mills, Multimedia Reporter & On-Air Host,
Yahoo Finance
What’s the biggest headwind preventing this deal from getting done, in your view? Is it macro issues or is it idiosyncratic
here?
Patrick Pacious, President & Chief Executive Officer, Choice Hotels
At the end of the day, we think it’s a misalignment between their shareholders, who we’ve been talking to for the past two months, and what the board
is doing. So, this opportunity, along with a potential proxy contest that would begin in the coming months here, the window opens in January, really gives us the opportunity to take this offer directly to their shareholders, and let the shareholders
decide on whether or not they want to see the compelling value creation, which we can create. Plus, it brings a huge amount of value to the combined company’s franchisees, who also benefit in a significant way.
Brian Sozzi, Executive Editor, Yahoo Finance
Part
of their contention, I think, is this can’t get past, or get regulatory approval, inside an election year. Can you address that?
Patrick
Pacious, President & Chief Executive Officer, Choice Hotels
We don’t believe that’s the case. As we’ve mentioned in our
release, we’ve already engaged proactively with the Federal Trade Commission. We look at the business and the consumer side of this. It’s important for your viewers to understand that franchisees set pricing. So we have tens of thousands
of franchisees between the two companies. They are the ones who set pricing, it’s not centrally controlled pricing like in some industries. And then when you look at the competitive landscape, we have large competitors, well-capitalized
competitors – Marriott, Hilton, IHG, Best Western, Hyatt, on down the line. And we also have private equity players like Blackstone and Starwood Capital, who together own four brands in our segment. So this is a very competitive marketplace,
and by putting our two companies together, we think we can bring real value to our shareholders and to our franchisees.
Brian Sozzi, Executive
Editor, Yahoo Finance
As you would expect from the Wyndham team, they seem to be pushing for a higher price, it’s what they’re supposed
to do. So I get it, and I think a lot of people out there get it. Are you prepared to go higher to achieve this asset or get this asset if their books suggest you should go higher and it’s warranted?
Patrick Pacious, President & Chief Executive Officer, Choice Hotels
That’s the perfect question, Brian, because you mentioned their books. We have always said in every offer we’ve made, if they will let us come in and
diligence their company, we can unlock additional value. And if it’s there, we would be willing to up our offer. But we can’t do that without proactive engagement from their management team and their board.
