RICHMOND, VA. — Apple Hospitality REIT Inc. (NYSE: APLE) has agreed to acquire Apple REIT Ten Inc. for $1.3 billion. The merger will create one of the largest select-service hospitality REITs in the industry with a combined 234 hotels and 30,017 rooms. The hotels are located in 94 MSAs across 33 states.
The company, which will retain the Apple Hospitality REIT name and ticker symbol, will have an enterprise value of approximately $5.7 billion, according to the companies.
Apple Ten, a non-traded REIT, was built and is managed by the same team that currently manages the publicly traded Apple Hospitality REIT.
The $1.3 billion transaction value is comprised of $94 million in cash, roughly 49.1 million Apple Hospitality common shares issued to Apple Ten shareholders, and the assumption of approximately $239 million in debt.
The merger agreement provides Apple Ten with a 45-day window to solicit alternative proposals from third parties. The termination fee for Apple Ten is $5 million if the company decides to pull out of the agreement within the 45-day window.
Following that grace period, Apple Ten will have to pay $25 million to negate the merger with Apple Hospitality. The grace period ends on May 28. Apple Ten does not intend to disclose developments throughout the solicitation process until its Board of Directors has made a final decision.
At closing, Apple Hospitality shareholders are expected to own 78 percent of the combined company with Apple Ten shareholders owning 22 percent. The transaction is expected to close in the third quarter of this year.
Wells Fargo Securities/Eastdil Secured and Robert W. Baird & Company Inc. are serving as financial advisors, and Hogan Lovells US LLP is serving as legal counsel to Apple Hospitality.
Citigroup Global Markets Inc. is serving as financial advisor to the Special Committee of Apple Ten’s Board of Directors, and McGuireWoods LLP is serving as legal counsel to Apple Ten and the Special Committee.
Apple Hospitality’s stock price closed on Thursday, April 14 at $19.26 per share, down from $19.97 a month ago.
— Christina Cannon