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The Battle for Wyndham Hotels – Merger Arbitrage Mondays

  • January 1, 2024

Happy New Year! Wishing all of you a wonderful 2024.

Wyndham Hotels & Resorts (WH) $80.41

Considering M&A activity slowed down significantly during a holiday shortened week, I figured I would briefly touch upon a pre-merger situation. The hostile acquisition of Wyndham Hotels & Resorts (WH) by Choice Hotels International (CHH) entered a new phase in late December when in an unusual move, Choice Hotels decided to start working with the FTC for regulatory approval of the deal. Choice Hotels has already engaged with institutional shareholders that hold over 40% of shares outstanding.

We have been tracking this potential deal in our Deals In The Works (DITW) since May 23, 2023 when the Wall Street Journal reported that Choice wanted to buy Wyndham. The evolution of this potential deal was covered in the tool as follows:

October 17, 2023: Choice Hotels International announced a proposal to acquire all the outstanding shares of Wyndham Hotels & Resorts at a price of $90 per share, payable in a mix of cash and stock.

October 17, 2023: Wyndham Hotels & Resorts Inc. (WH) called Choice Hotels International Inc.’s (CHH)  takeover offer “underwhelming,” rejecting a proposal that would create a budget hotel behemoth.

According to the statement, Choice is offering to pay $90 a share in cash and stock, in a deal valued at about $9.8 billion including the assumption of debt.

October 25, 2023: Choice Hotels International (CHH) calls on Wyndham Hotels & Resorts (WH) to engage in discussions over a merger.

November 21, 2023: Wyndham (WH) has disclosed that it received a new offer from Choice Hotels (CHH) a week ago and Wyndham stated in a released statement that the offer is deemed a “step backwards.”

November 27, 2023: According to Reuters, Choice Hotels International is preparing to nominate directors to the board of rival Wyndham Hotels & Resorts, seeking to break a stalemate in an $8 billion takeover battle.

December 12, 2023: Choice Hotels International (CHH) commenced an exchange offer for the shares of Wyndham Hotels & Resorts (WH) and said it was preparing to nominate candidates to the board of the takeover-target. The offer is unchanged from its previous proposal to Wyndham itself of $49.50 in cash and 0.324 Choice share for each Wyndham share.

December 18, 2023: Wyndham Hotels & Resorts (WH) said it had asked its shareholders to spurn Choice Hotels International’s (CHH) acquisition exchange offer, about a week after the latter launched a hostile takeover bid.

December 20, 2023: Choice Hotels (CHH) pushes ahead on the regulatory process with Wyndham (WH) takeover.

The Opportunity

Choice Hotels’ stock closed on Friday at $113.30. Using the $49.50 in cash and 0.324 shares of Choice proposed structure, the value of Wyndham works out to $86.21. This is below the initial $90 offer because Choice’s stock has been under pressure ever since it revealed the cash plus stock nature of the deal.

The spread of the proposed deal is now just 7.21%. While this is not a bad return for one year, I think there is a high probability Choice will sweeten the offer by either increasing the overall deal value above $90 per Wyndham share or changing the structure of the deal to include more cash.

I rarely participate in pre-merger deals (Continental Resources, Momentive and Pioneer Natural Resources were exceptions) but this one is interesting and I plan to track it closely to see if there is an opportunity to start a position in Wyndham.


M&A activity declined last week with two new deals announced and two deals completed.

We have updated the closing dates for six mergers that were supposed to close by 12/31/2023 to either 1/31/2024 or 3/31/2024. These six mergers are:

  1. The merger of Lakeland Bancorp (LBAI) and Provident Financial Services (PFS) for $1.3 billion in an all stock deal.
  2. The acquisition of PNM Resources (PNM) by Avangrid (AGR) for $8.05 billion or $50.30 per share in cash.
  3. The acquisition of Amedisys, Inc. (AMED) by UnitedHealth Group Incorporated (UNH) for $3.8 billion or $101 per share in cash. The outside date for this acquisition is June 26, 2024.
  4. The combination of EchoStar Corporation (SATS) and DISH Network Corporation (DISH) for $1.89 billion in an all stock deal. This deal was supposed to close on Sunday, December 30, 2023 following the filing of a delisting notice on December 29, but I have not seen confirmation of closing from either company. I expect we will see a press release or SEC filing in the coming days.
  5. The acquisition of Startek, Inc. (SRT) by Capital Square Partners for $217 million or $4.30 per share in cash.
  6. The acquisition of Green Plains Partners (GPP) by Green Plains (GPRE) for a closing value of $476.64 million in a cash plus stock deal.

You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) which automatically updates itself during market hours.

Merger Arbitrage

Deal Statistics:

Total Number of Deals Closed in 2023190
Total Number of Deals Not Completed in 202313
Total Number of Pending Deals
Cash Deals34
Stock Deals20
Stock & Cash Deals4
Special Conditions7
Total Number of Pending Deals65
Aggregate Deal Consideration$1.06 trillion

New Deals:

  1. GRCL: The acquisition of Gracell Biotechnologies Inc. (GRCL) by AstraZeneca (AZN) for $1 billion or $10 per ADR in cash. The deal also includes a CVR worth $1.50 per ADR.
  2. RYZBThe acquisition of RayzeBio (RYZB) by Bristol Myers Squibb (BMY) for a closing value of $3.6 billion or $62.50 per share in cash.

Approvals:

  1. AMTI: On December 26, 2023, Applied Molecular Transport (AMTI) shareholders voted in favour of the company’s acquisition by Cyclo Therapeutics, Inc. (CYTH).

Updates:

  1. SIX: According to a proxy filing, on December 20, 2023, Six Flags (SIX) and Cedar Fair (FUN) withdrew and refiled their premerger notification and report under the HSR Act on December 21, 2023.
  2. SLGC: SomaLogic (SLGC) issued a statement correcting the Madryn Asset Management press release regarding the pending merger with Standard BioTool (LAB). SomaLogic announced Madryn did not publish the response email from Adam Schecter, Chairman and CEO of LabCorp (LH), which makes clear there is no substance to Madryn’s claims and that since the announcement of its pending merger with Standard BioTools, SomaLogic has not received any indication of interest or proposal from LabCorp or any other party with respect to a potential alternative transaction.
  3. PNM: PNM Resources (PNM) has entered into an agreement to sell its 50% ownership interest in its renewable joint venture, New Mexico Renewable Development (NMRD) to Exus North America Holdings. PNM Resources and American Electric Power (AEP), which also owns 50% of NMRD, have agreed to sell the NMRD portfolio for approximately $230 million subject to true-up adjustments at close. PNM Resources’ $115 million share of the approximate gross proceeds will support the funding of regulated capital investments. The sale is expected to close in February 2024.
  4. HOLI: On December 27, 2023, Hollysys Automation Technologies (HOLI) announced its go-shop period has ended and that it didn’t receive any offer that it deemed superior to its $26.50 a share sale to Ascendent Capital. In the event the company changes its recommendation in respect of the Ascendent merger agreement and accepts a Superior Proposal in accordance with the merger agreement, a termination fee of $33 million will become payable.
  5. ICVX: On December 27, 2023, AstraZeneca (AZNlaunched a tender offer in the all cash $15 per share acquisition of Icosavax (ICVX) that includes a $5 per share CVR. The offer expires on January 26, 2023.
  6. HES: On December 28, 2023, Bloomberg reported that the Venezuelan-Guyana dispute puts Chevron’s (CVX) oilfields at risk, part of its $53 billion takeover of Hess (HES), which partners with Exxon Mobil in Guyana. Following President Maduro’s deployment of soldiers and Guyana receiving a UK warship, Hess Corp., acquired by Chevron, sees a 2.6% drop amid tensions over the Essequibo territory.
  7. HA: According to the proxy statement filed on December 28, 2023, in addition to the required antitrust related clearance, Hawaiian Holdings (HA) by Alaska Air Group (ALKalso need to obtain clearance from the U.S. Department of Transportation (DOT), the U.S. Federal Aviation Administration (FAA) and the Federal Communications Commission (FCC).

Closed Deals:

  1. PNT: The acquisition of POINT Biopharma Global (PNT) by Eli Lilly and Company (LLY) was completed on December 27, 2023.  It took 85 days for this deal to complete.
  2. AMTIThe merger of Applied Molecular Transport (AMTI) with Cyclo Therapeutics (CYTH) in an all stock deal completed on December 27, 2023. It took 97 days for the deal to complete.

Weekly Spread Changes:

The table below shows weekly spread changes between December 26, 2023, and December 29, 2023.

SymbolQuoteAcquiring
Company
Acquiring
Company Quote
Current
Spread
Last Week
Spread
Spread Change
Weekly
Deal
Type
MIXT8.61PowerFleet, Inc. (PWFL)3.4273.18%57.12%16.06%All Stock
WRK41.52Smurfit Kappa (SMFTF)40.8110.33%4.55%5.78%Cash Plus Stock
SAVE16.39JetBlue Airways Corporation (JBLU)5.5489.14%84.09%5.05%All Cash
CNSL4.36Searchlight Capital Partners and British Columbia Investment Management Corporation (N/A)7.80%4.91%2.89%All Cash
GAN1.58Sega Sammy Creation Inc. (N/A)24.68%22.36%2.32%All Cash
LBC10.81Washington Federal, Inc. (WAFD)32.992.33%3.94%-1.61%All Stock
VERY11.3iA American Holdings, Inc. (N/A)1.15%2.97%-1.82%All Cash
ICLK3.85TSH Investment Holding Limited (N/A)5.97%7.94%-1.97%All Cash
ACI23The Kroger Co. (KR)45.7118.48%20.95%-2.47%Special Conditions
HOLI26.35Ascendent Capital Partners (N/A)0.57%3.76%-3.19%All Cash

Top 10 Merger Arbitrage Deals With The Largest Spreads:

Please do your own due diligence on deals with large spreads. Some of these large spreads might be related to regulatory issues or because of the way the deal is structured. We classify some of these deals as “special situation” deals in our merger arbitrage tool and provide additional details to help with the analysis. There may be unique situations related to special dividends, spinoffs, proration, etc. that need to be accounted for when looking at these spreads.

SymbolAnnounced
Date
Acquiring
Company
Closing
Price
Last
Price
Closing
Date
ProfitAnnualized
Profit
SAVE07/28/2022JetBlue Airways Corporation (JBLU)$31.00$16.3906/30/202489.14%177.79%
MIXT10/10/2023PowerFleet, Inc. (PWFL)$14.91$8.6103/31/202473.18%290.35%
IRBT08/05/2022Amazon (AMZN)$51.75$38.6908/05/202433.76%56.26%
HA12/03/2023Alaska Air Group, Inc. (ALK)$18.00$14.2206/30/202426.58%53.02%
GAN11/07/2023Sega Sammy Creation Inc. (N/A)$1.97$1.5812/31/202424.68%24.55%
PNM10/21/2020Avangrid, Inc. (AGR)$50.30$41.612/31/202320.91%7633.41%
ACI10/14/2022The Kroger Co. (KR)$27.25$2303/31/202418.48%73.31%
CPRI08/10/2023Tapestry, Inc. (TPR)$57.00$50.2406/30/202413.46%26.84%
X12/18/2023Nippon Steel (NISTF)$55.00$48.6509/30/202413.05%17.32%
WRK09/12/2023Smurfit Kappa (SMFTF)$45.81$41.5206/30/202410.33%20.61%

Deals In The Works

  1. RPHMAccording to a 13D filing, Reneo Pharmaceuticals (RPHM) received a non-binding takeover proposal from Concerta Biosciences for $1.80 per share in cash, plus a contingent value right (CVR) representing the right to receive 80% of the net proceeds payable from any license or disposition of Reneo’s programs.

SPAC Arbitrage

SPAC IPO

  1. On December 27, 2023, Iron Horse Acquisitions Corp. (IROHU) announced the pricing of its upsized $61 million IPO.

Business Combination

  1. On December 22, 2023, BurTech Acquisition Corp. (BRKH) and Blaize, Inc entered into a definitive agreement for a business combination.
  2. On December 27, 2023, PowerUp Acquisition Corp. (PWUP) and Visiox Pharmaceuticals, Inc. entered into a business combination.
  3. On December 27, 2023, AIB Acquisition Corporation (AIB) and PSI Group Holdings Ltd entered into a definitive agreement for a business combination.

Completed

  1. On December 22, 2023, Brilliant Acquisition (BRLI) and Nukkleus, Inc. (NUKKcompleted their business combination.
  2. On December 22, 2023, Clean Earth Acquisitions (CLIN) and Alternus Energy Group (ALCEcompleted their business combination.
  3. On December 27, 2023, EG Acquisition Corp. (EGGF) and flyExclusive (FLYX) announced the completion of their previously announced business combination.
  4. On December 28, 2023, Innovative International Acquisition Corp. (IOAC) and Zoomcar Holdings, Inc. (ZCARcompleted their business combination.

List of all pending Merger Arbitrage deals:

TargetAnnounced

Date

AcquirerDeal

Type

Closing

Value

Deal

Price

Last

Price

Target VolumeEstimated

Closing Date

ReturnAnnualized

Return

+SAVE7/28/22JetBlue Airways Corporation

(
JBLU
)
All Cash$7.6 B$31.00$16.392,710,9686/30/2489.14%179.76%
+MIXT10/10/23PowerFleet, Inc.

(
PWFL
)
All Stock$140 M$14.91$8.6144,7933/31/2473.18%296.80%
+IRBT8/05/22Amazon

(
AMZN
)
All Cash$1.7 B$51.75$38.7254,2318/05/2433.72%56.72%
+HA12/03/23Alaska Air Group, Inc.

(
ALK
)
All Cash$1.19 B$18.00$14.21,089,2246/30/2426.76%53.96%
+GAN11/07/23Sega Sammy Creation Inc.
(N/A)
All Cash$85.73 M$1.97$1.581,267,28512/31/2424.68%24.68%
+PNM10/21/20Avangrid, Inc.

(
AGR
)
All Cash$8.05 B$50.30$41.6454,3833/31/2420.91%84.82%
+ACI10/14/22The Kroger Co.

(
KR
)
Special Conditions$24.6 B$27.25$232,616,6893/31/2418.48%74.94%
+CPRI8/10/23Tapestry, Inc.

(
TPR
)
All Cash$8.5 B$57.00$50.24691,6206/30/2413.46%27.13%
+X12/18/23Nippon Steel

(
NISTF
)
All Cash$14.9 B$55.00$48.653,617,2829/30/2413.05%17.45%
+WRK9/12/23Smurfit Kappa

(
SMFTF
)
Cash Plus Stock$23.24 B$45.81$41.521,868,8516/30/2410.33%20.84%
+GTH10/11/23New Genetron Holding Limited and Genetron New Co Limited
(N/A)
All Cash$126.44 M$4.03$3.6812,4983/31/249.51%38.57%
+CNSL10/16/23Searchlight Capital Partners and British Columbia Investment Management Corporation
(N/A)
All Cash$3.1 B$4.70$4.35499,7031/15/258.05%7.73%
+SQNS8/07/23Renesas Electronics Corporation
(N/A)
All Cash$249 M$3.03$2.8376,2923/31/247.07%28.66%
+ICLK11/24/23TSH Investment Holding Limited
(N/A)
All Cash-$12.92 M$4.08$3.839,0823/31/246.53%26.47%
+AMED6/26/23UnitedHealth Group Incorporated

(
UNH
)
All Cash$3.8 B$101.00$95.06177,8913/31/246.25%25.34%
+CERE12/06/23AbbVie Inc.

(
ABBV
)
All Cash$8.7 B$45.00$42.4769,9286/30/246.13%12.37%
+HES10/23/23Chevron Corporation

(
CVX
)
All Stock$60 B$152.89$144.162,279,0726/30/246.06%12.21%
+CCLP12/19/23Kodiak Gas Services

(
KGS
)
All Stock$854 M$1.73$1.6335,5116/30/245.94%11.99%
+IMGN11/30/23AbbVie Inc.

(
ABBV
)
All Cash$7.29 B$31.26$29.654,028,1596/30/245.43%10.95%
+AEL7/05/23Brookfield Reinsurance (BNRE)

(
BAM
)
Cash Plus Stock$4.3 B$58.82$55.8665,0856/30/245.41%10.90%
+SP10/05/23Metropolis Technologies, Inc.
(N/A)
All Cash$1.9 B$54.00$51.2573,02112/31/245.37%5.37%
+FNCB9/27/23Peoples Financial Services Corp.

(
PFIS
)
All Stock$129 M$7.11$6.7915,1746/30/244.72%9.51%
+SOVO8/07/23Campbell Soup Company

(
CPB
)
All Cash$2.7 B$23.00$22.03484,1026/30/244.40%8.88%
+KRTX12/22/23Bristol-Myers Squibb

(
BMY
)
All Cash$12.7 B$330.00$316.511,114,1886/30/244.26%8.59%
+CSTR10/26/23Old National Bancorp

(
ONB
)
All Stock$344.4 M$19.51$18.7476,4106/30/244.10%8.26%
+NWLI10/09/23Prosperity Life Group
(N/A)
All Cash$1.9 B$500.00$483.0216,5556/30/243.52%7.09%
+OLK10/17/23Thermo Fisher Scientific Inc.

(
TMO
)
All Cash$3.1 B$26.00$25.15944,3966/30/243.38%6.82%
+SMMF8/25/23Burke & Herbert Financial Services Corp.

(
BHRB
)
All Stock$371.5 M$31.72$30.6935,6013/31/243.36%13.62%
+PXD10/11/23Exxon Mobil Corporation

(
XOM
)
All Stock$64.5 B$232.29$224.882,197,1356/30/243.30%6.65%
+LBC11/13/22Washington Federal, Inc.

(
WAFD
)
All Stock$654 M$11.05$10.7113,2382/29/243.19%19.73%
+SPLK9/21/23Cisco

(
CSCO
)
All Cash$28.45 B$157.00$152.351,138,4619/30/243.05%4.08%
+NGMS5/14/23Aristocrat Leisure Limited

(
ALL.AX
)
All Cash$1.2 B$29.50$28.6344,8495/14/243.04%8.28%
+DSKE12/22/23TFI International Inc.

(
TFII
)
All Cash$1.12 B$8.30$8.1753,1776/30/242.47%4.98%
+AYX12/18/23Clearlake Capital and Insight Partners
(N/A)
All Cash$4.4 B$48.25$47.161,371,2936/30/242.31%4.66%
+VERY10/03/23iA American Holdings, Inc.
(N/A)
All Cash$170 M$11.43$11.191,3426/30/242.14%4.33%
+FRLN11/22/23Syncona Ltd
(N/A)
All Cash-$9.91 M$6.50$6.379,5163/31/242.04%8.28%
+TGH10/22/23Stonepeak
(N/A)
All Cash$7.4 B$50.00$49.2399,8003/31/241.63%6.59%
+CWBC10/11/23Central Valley Community Bancorp

(
CVCY
)
All Stock$99.4 M$17.66$17.3922,5446/30/241.53%3.09%
+LBAI9/27/22Provident Financial Services, Inc.

(
PFS
)
All Stock$1.3 B$15.00$14.79191,4823/31/241.41%5.74%
+CATC9/19/23Eastern Bankshares, Inc.

(
EBC
)
All Stock$528 M$70.38$69.431,3903/31/241.41%5.70%
+AMNB7/25/23Atlantic Union Bankshares Corporation

(
AUB
)
All Stock$416.8 M$49.33$48.7524,6893/31/241.19%4.82%
+ROVR11/29/23Blackstone
(N/A)
All Cash$2.3 B$11.00$10.881,754,7063/31/241.10%4.47%
+EGLE12/11/23Star Bulk Carriers Corp.

(
SBLK
)
All Stock$947.77 M$55.72$55.4121,0126/30/240.59%1.18%
+HOLI12/11/23Ascendent Capital Partners
(N/A)
All Cash$1.66 B$26.50$26.35680,7426/30/240.57%1.15%
+RYZB12/26/23Bristol Myers Squibb

(
BMY
)
All Cash$3.6 B$62.50$62.17895,4226/30/240.53%1.07%
+RPT8/28/23Kimco Realty

(
KIM
)
All Stock$2 B$12.89$12.8340,083,6351/31/240.47%5.73%
+CVLY12/12/23Orrstown Financial Services, Inc.

(
ORRF
)
All Stock$207 M$25.81$25.727,4989/30/240.44%0.59%
+ESMT10/23/23Vista Equity Partners
(N/A)
All Cash$4 B$23.00$22.9467,4763/31/240.44%1.77%
+DOC10/30/23Healthpeak Properties, Inc.

(
PEAK
)
All Stock$4.63 B$13.35$13.311,912,5246/30/240.26%0.53%
+CHS9/28/23Sycamore Partners
(N/A)
All Cash$1.59 B$7.60$7.581,802,1933/31/240.26%1.07%
+SRC10/30/23Realty Income Corporation

(
O
)
All Stock$9.3 B$43.75$43.691,610,8753/31/240.15%0.59%
+THRX12/22/23Concentra Biosciences
(N/A)
Special Conditions-$27.71 M$4.05$4.05197,6302/29/240.00%0.00%
+BVH11/06/23Hilton Grand Vacations Inc.

(
HGV
)
All Cash$1.5 B$75.00$75.12176,6916/30/24-0.16%-0.32%
+GRCL12/26/23AstraZeneca

(
AZN
)
Special Conditions$1 B$10.00$10.041,742,2223/31/24-0.40%-1.62%
+SATS8/08/23DISH Network Corporation

(
DISH
)
All Stock$1.89 B$16.44$16.5717,427,7091/31/24-0.76%-9.21%
+MRTX10/08/23Bristol-Myers Squibb Company

(
BMY
)
Special Conditions$3.7 B$58.00$58.751,834,5593/31/24-1.28%-5.18%
+EAR10/30/23Patient Square Capital
(N/A)
All Cash-$27.49 M$2.55$2.5944,2993/31/24-1.54%-6.26%
+PGTI12/18/23Masonite International

(
DOOR
)
Cash Plus Stock$3 B$39.73$40.7496,9116/30/24-2.40%-4.83%
+SRT10/10/23Capital Square Partners
(N/A)
All Cash$217 M$4.30$4.411,303,0311/31/24-2.49%-30.35%
+ORTX10/05/23Kyowa Kirin Co., Ltd.
(N/A)
Special Conditions$387.4 M$16.00$16.4567,3223/31/24-2.74%-11.09%
+SLGC10/04/23Standard BioTools Inc.

(
LAB
)
All Stock-$35.14 M$2.45$2.531,605,0363/31/24-3.04%-12.33%
+RAIN12/13/23Pathos AI, Inc.
(N/A)
Special Conditions-$35.53 M$1.16$1.2447,6501/31/24-3.33%-40.56%
+GPP9/18/23Green Plains Inc.

(
GPRE
)
Cash Plus Stock$476.64 M$12.21$12.7358,5061/31/24-4.05%-49.31%
+ICVX12/12/23AstraZeneca PLC

(
AZN
)
Special Conditions$435.14 M$15.00$15.76268,1983/31/24-4.82%-19.56%
+SIX11/02/23Cedar Fair, L.P.

(
FUN
)
All Stock$4.86 B$23.08$25.081,306,3636/30/24-7.96%-16.05%

Disclaimer: I hold long positions in Capri (CPRI) and Genetron Holdings (GTH). Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.