Advantage Pebblebrook Hotel Trust, which on Monday made its third and more attractive offer to acquire LaSalle Hotel Properties for US$37.80 a share, representing an implied 13% premium over the Blackstone offer of US$33.50 in cash. The new offer valued at US$4.17 billion takes into account the US$112 million termination fee LaSalle would have to pay to walk away from its deal with Blackstone.
Now the question becomes whether or not Blackstone comes back with a better cash offer (its offer was valued at US$3.7 billion, excluding debt) to sway shareholders again.
The revised terms are based on a fixed exchange ratio of 0.92 Pebblebrook common shares for each LaSalle common share, with a revised cash option (still 80/20 stock/cash but shareholders can now elect to receive US$37.80 in cash/share subject to a maximum of 20% of the aggregate election provided in cash).
The Pebblebrook-LaSalle combination would bring together LaSalle’s 41 hotels with 28 owned by Pebblebrook.
The company fresh offer reflects LaSalle’s share gains since its initial bid last month, according to a Pebblebrook statement.
“There’s been a great level of enthusiasm from both sets of investors for our offer and our desire to put the two companies together, and the stock reactions prove that,” Pebblebrook Chairman, CEO and President Jon Bortz told Bloomberg.
In a news statement, Bortz said, “It provides both immediate and long-term value for LaSalle shareholders who will be able to benefit from the improving industry fundamentals in this already strong travel environment. In addition, the stock consideration offers LaSalle’s shareholders a more attractive opportunity from a tax perspective, and for those shareholders who want cash, the market has demonstrated that there is substantial liquidity at prices significantly above the Blackstone offer.”
LaSalle said in a statement Monday that it will review Pebblebrook’s new proposal to determine the course of action in the best interest of investors.