LaSalle Hotel accepts Blackstone’s $3.7bn offer

NEW YORK: LaSalle Hotel Properties decided to sell itself to private equity firm Blackstone Group LP for $3.7 billion in cash, rejecting a cash-and-stock offer from rival Pebblebrook Hotel Trust. Blackstone’s offer values LaSalle at $33.50 per share and represents a premium of 5 per cent to LaSalle’s closing price on Friday.
Pebblebrook’s offer, which values the US hotel owner at $35.89 per share based on Friday’s close, consisted of a maximum of 20 per cent in cash and the rest in stock.
“Blackstone offer provides immediate and certain cash value,” Baird Equity Research analyst Michael Bellisario wrote in a note.
LaSalle Chairman Stuart Scott said it was in touch with 20 potential buyers and signed confidentiality agreements with 10 of them before deciding on Blackstone’s offer.
Shares of LaSalle rose above Blackstone’s offer and were trading up 5.6 per cent at $33.70 on Monday, indicating that the market was expecting a higher offer.
“We believe Pebblebrook would likely have to raise its offer by 5-10 per cent,” SunTrust analyst Patrick Scholes said in a note, adding that the company may not want to be involved in a bidding war.
Pebblebrook could not be immediately reached for a comment on whether it would raise its offer further.
Pebblebrook had raised its offer on April 20 to $31.75 per share, after LaSalle rejected its previous bid, saying it undervalued the company.
Blackstone usually buys hotels and other real estate holdings at a discount, restructures them and sells for a
profit.
The private equity firm exited Hilton Worldwide Holdings Inc on Friday after nearly 11 years by selling about 5.8 per cent stake or 15.8 million shares in the hotel chain operator for about $1.32 billion.
Citigroup Global Markets Inc and Goldman Sachs & Co LLC were the financial advisers, while Goodwin Procter LLP and DLA Piper LLP (US) were the legal advisers to LaSalle.
Morgan Stanley & Company LLC and JP Morgan were the financial advisers to Blackstone. Simpson Thacher & Bartlett LLP was acting as legal adviser to Blackstone.— Reuters