Blackstone to Buy Strategic Hotels & Resorts in $6B Stock Deal

CHICAGO — Blackstone Real Estate Partners VIII LP and Strategic Hotels & Resorts Inc. (NYSE: BEE) have entered into a definitive agreement in which Blackstone will acquire all outstanding Strategic common stock, in a transaction totaling approximately $6 billion.

Blackstone will acquire the shares in cash at a share price of $14.25. The transaction will also include all outstanding membership units of Strategic’s subsidiary, Strategic Hotels Funding LLC, for the same cash price.

“We believe this transaction capitalizes on our unique portfolio, strong asset management platform and continued operating outperformance over the past several years,” said Raymond “Rip” Gellein, chairman and CEO of Strategic Hotels.

“The board thoroughly considered various alternatives over the course of the past few years, and this all-cash offer from Blackstone creates significant stockholder value with a high degree of execution certainty.”

The transaction is expected to be completed by the first quarter of 2016, and is contingent upon customary closing conditions, including the approval of Strategic Hotel’s stockholders, who will vote on the transaction on a date to be announced.

Strategic Hotels’ board of directors has unanimously approved the merger agreement.

The offer price represents a premium of approximately 13 percent over the unaffected intra-day trading price on July 23, 2015, when a media article reported on a potential Strategic Hotels transaction.

J.P. Morgan is acting as financial advisor and Sidley Austin LLP is acting as legal advisor to Strategic Hotels. Simpson Thacher & Bartlett LLP is acting as legal advisor to Blackstone.

Strategic Hotels is a REIT that owns and provides value-enhancing asset management of high-end hotels and resorts in the United States. Currently the company has ownership interests in 17 properties, including the Four Seasons resorts in Jackson Hole, Wyo., and Scottsdale, Ariz., as well as the Intercontinental Chicago.

Blackstone’s real estate business was founded in 1991 and has $92 billion in investor capital under management. The company’s real estate portfolio includes hotel, office, retail, industrial and residential properties in the United States, Europe, Asia and Latin America.

BEE’s stock price closed at $13.60 per share on Friday, September 4, up from $12.10 a year ago.

— Scott Reid

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