Pebblebrook Hotel Trust is taking another stab at acquiring LaSalle Hotel Properties, this time increasing its offer to more than US$3 billion.
The new offer by Bethesda, Maryland-based Pebblebrook is 5.8% higher than last month’s offer, valuing the stock at US$31.75 versus US$29.95 per share, according to Reuters. Pebblebrook CEO Jon Bortz, who founded LaSalle in 1998, told the news service that the reaction to the initial offer, which sent LaSalle shares 20% higher, was “overwhelmingly” positive. “Pebblebrook is disappointed that LaSalle has not responded to our revised proposal and continues to refuse to negotiate an agreement to combine the two companies which would benefit the shareholders of both companies,” Bortz said.
Also viewing the acquisition of Maryland-based LaSalle positively is Baird Equity Research’s Michael Bellisario: “We also see substantial embedded value within LaSalle’s primarily unencumbered of brand and management portfolio,” he wrote this morning. “We believe Pebblebrook continues to move expeditiously toward consummating a transaction, which we believe is indicative of the value Pebblebrook sees in LaSalle’s portfolio currently.”
According to Bellisario, LaSalle said its board will review the revised proposal, which “reflects better-than-expected 1Q18 earnings, which skews the merger math a bit in its favor, in our opinion.”
SunTrust Robinson Humphrey’s Patrick Scholes concurred. “Our thoughts: It is hard for us to envision (LaSalle) shareholders getting a significantly better offer and we recommend LHO take the deal.” It added, “The revised offer represents a 15.6x EBITDA multiple on our 2018 estimated EBITDA… By our calculations, we believe shares of LHO have never traded at these multiples in the past (including pre-2008).”
LaSalle has a portfolio of 41 hotel properties in the U.S.