BETHESDA, MD. — Affiliates of global asset management firm Blackstone have agreed to acquire Maryland-based LaSalle Hotel Properties in an all-cash transaction valued at roughly $4.8 billion. The deal is expected to close during the third quarter.
LaSalle’s portfolio spans 104,000 guestrooms across 41 properties in 11 markets.
Under the terms of the agreement, Blackstone will acquire all outstanding shares of LaSalle’s common stock at $33.50 per share. This price represents a premium of about 35 percent over the company’s stock price of $24.84 per share at the time the deal was proposed. LaSalle’s stock price closed at $31.90 per share on Friday, May 18, up from $28.53 per share in mid-May 2017.
“After careful consideration of multiple proposals received, the board determined that this transaction represents the most compelling opportunity for LaSalle’s shareholders,” said Stuart Scott, chairman of the board for LaSalle. “This transaction will deliver a significant premium with immediate and certain cash value.”
Blackstone submitted a winning bid after hospitality REIT Pebblebrook Hotel Trust offered to acquire LaSalle in late April. Local news outlet WTOP reports that Pebblebrook, which is also based in Bethesda, entered a bid of $3.7 billion. However, in a statement released this morning, Pebblebrook claimed it had submitted the higher bid.
According to Pebblebrook’s statement, the company offered to merge with LaSalle at a 92 percent fixed exchange ratio, meaning LaSalle shareholders would receive 0.92 Pebblebrook shares for each share of LaSalle common stock. As Pebblebrook’s stock price closed at $39.01 per share on Friday, May 18, this exchange ratio implies that Pebblebrook offered a price of $35.89 per share for LaSalle. The statement contends that Pebblebrook’s offer represented a 7.1 percent premium increase over Blackstone’s bid.
“Our offer is substantially superior to the merger agreement that LaSalle has reached with Blackstone,” said Jon Bortz, chairman, president and CEO of Pebblebrook Hotel Trust. “We continue to believe that our offer maximizes immediate and long-term value for LaSalle’s shareholders. The combination of Pebblebrook and LaSalle would create a hotel industry leader, particularly in the independent and lifestyle segment, and it would allow shareholders of both companies to benefit from Pebblebrook’s management of the combined portfolio.”
The stock price of New York-based private equity and asset management firm The Blackstone Group LP, the parent company of the acquiring entity, closed at $31.29 per share on Friday, May 18, down from $31.88 per share a year ago.
For Blackstone, which has approximately $120 billion in real estate assets under management, this is the third major acquisition of 2018. The company acquired industrial power player Gramercy Property Trust for $7.6 billion earlier this month and merged with Pure Industrial Real Estate Trust in January. The latter transaction was valued at roughly $3.8 billion. Blackstone also purchased a 22 million-square-foot industrial portfolio in March for $1.8 billion.
Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC are acting as financial advisors to LaSalle and Goodwin Procter LLP and DLA Piper LLP (US) are acting as legal counsel. Morgan Stanley & Co. LLC and J.P. Morgan are acting as financial advisors and Eastdil Secured LLC is acting as real estate advisor to Blackstone. Simpson Thacher & Bartlett LLP is acting as legal advisor to Blackstone.
— Taylor Williams