Deal comes after Blackstone announced plans to sell the last of its Hilton Worldwide Holdings shares
NEW YORK • Three days after agreeing to sell off the last of its Hilton stake, Blackstone is buying another hotel company.
Blackstone Group LP has agreed to acquire luxury hotel owner LaSalle Hotel Properties, according to people with knowledge of the matter. The all-cash transaction values LaSalle at US$33.50 a share, or US$4.8 billion (RM19.1 billion) including debt, said the people, who asked not to be identified because the deal is confidential. Representatives for Blackstone and LaSalle declined to comment. The deal comes after Blackstone announced plans last Friday to sell the last of its Hilton Worldwide Holdings Inc shares.
The agreement represents a premium of almost 35% above LaSalle’s share price on March 27, the day before its smaller rival, Pebblebrook Hotel Trust, announced a proposed allstock deal for LaSalle, the owner of 41 luxury hotels. What Blackstone is offering is more than double the 14.7% median premium applied to US real estate investment trust transactions over US$1 billion in size over the past five years, according to Goldman Sachs Group Inc data.
The Blackstone agreement thwarts a would-be merger between Bethesda, Marylandbased LaSalle and Pebblebrook, which had been seeking to combine with LaSalle to create a portfolio of upscale hotels and more formidably compete with real estate investment trusts such as Host Hotels & Resorts Inc and Park Hotels & Resorts Inc, the latter of which is a Hilton spinoff.
Pebblebrook has publicly made three proposals for LaSalle. Its most recent was disclosed on April 24 and involved the exchange of 0.9085 of a Pebblebrook share for each LaSalle share.
That valued each LaSalle share at US$35.44 based on Pebblebrook’s closing price last Friday, but based on its volume-weighted average price over the past month, the implied value is roughly US$32.80.
Even though by some measures the Pebblebrook proposal is higher than Blackstone’s cash offer, LaSalle’s board of directors prefers the certainty of the latter, according to the people with knowledge of the matter.
Still, it’s unclear how LaSalle’s investors, including HG Vora, which owns 9.1% of the hotel company’s stock, will view the transaction, which requires support from twothirds of the shareholder base to proceed.
HG Vora last week urged the company’s trustees to negotiate final structural terms with Pebblebrook, specifically singling out the mix of cash and stock, which had been a point of contention. When LaSalle previously rejected Pebblebrook, it described its potential suitor’s stock as “overvalued” and said it had “significant concerns” that Pebblebrook’s share price reflected “its overly optimistic growth targets”.
LaSalle also said that it was not confident Pebblebrook would meet its guidance. Pebblebrook’s third offer was also stock-based, but it allowed for 20% of LaSalle’s shareholders to seek cash proceeds, up from 15% in its second proposal. Pebblebrook’s third proposal came after Bloomberg reported that other potential bidders including Blackstone were circling the company.
Last Friday, Blackstone agreed to sell 15.8 million Hilton shares, the last of its holdings in the hotel company. — Bloomberg