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Ashford says offer for FelCor adds more value

Ashford Hospitality Trust on Tuesday sent a letter to the FelCor Lodging Trust board stating it believes its recently revised offer to include 50% cash provides more value to shareholders than the all-stock merger agreement announced on Monday with RLJ Lodging Trust.

Ashford stated in its letter that its offer would have been more attractive to shareholders than the RLJ offer as it included 50% cash, would have provided a more certain path to future value creation through guaranteed synergies and operational enhancements and offered a higher dividend yield on the stock component of the bid. Ashford also expressed its disappointment that the FelCor board decided not to meaningfully engage on the recently revised offer.

RLJ stated on Monday it would buy FelCor Lodging Trust in an all-stock transaction that values FelCor at US$8.54 per share based on the April 21 closing price (a 16.7% premium for FelCor shareholders). The new combination, which would have a pro-forma market value of US$4.2 billion and an enterprise value of US$7 billion, would own 160 hotels in 26 states and the District of Columbia, across brands including Marriott, Hilton, Hyatt and Wyndham.

The exchange ratio is 0.362 shares of RLJ in exchange for each share of FelCor stock, which results in RLJ’s shareholders owning 71% of the combined entity.

Ashford Trust announced that it had submitted a revised offer to FelCor’s Board of Directors on April 20, 2017, comprised of 50% cash consideration and valued at US$8.22 per share based on the April 24, 2017, closing share price of AHT of $6.43 per share. Despite the acceptance of RLJ’s all-stock offer, FelCor pushed hard for a cash offer from Ashford Trust.

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