Blackstone, Starwood Capital Increase Offer to Buy Extended Stay America
The deal for Extended Stay America Inc. is a little bit sweeter.
Blackstone Real Estate Partners and Starwood Capital Group have signed an amendment to their previously announced definitive merger agreement with Extended Stay America Inc. and its paired-share REIT, ESH Hospitality, Inc.. Under the terms of the merger agreement, as amended, a 50/50 joint venture between funds managed by Blackstone and Starwood Capital will now pay STAY shareholders an additional $1.00 per paired share in cash for a total consideration of $20.50 per paired share in cash. The merger agreement, as amended, has been unanimously approved by the entire boards of directors of both ESA and ESH.
The $20.50 per paired share consideration represents the Blackstone/Starwood Capital joint venture’s best and final offer and a 21.0% premium over the closing STAY price of $16.94 on March 12, 2021, the last trading day prior to the execution of the merger agreement on March 14, 2021. The company encourages shareholders to consider the meaningful downside risk recognized by independent third parties in the event a transaction is not approved. The company notes that the amended transaction represents an implied 30.3% premium, which ranks in the 81st percentile of precedent REIT all-cash transactions since 2013, based on the extrapolated STAY stock price since the March 15th announcement over which time lodging companies have traded down 7.1%.1
Tyler Henritze, Head of Acquisitions Americas for Blackstone Real Estate, said, “... the revised offer and merger agreement have been approved by every director of ESA and ESH’s boards. Pending shareholder approval of this best and final offer, we look forward to closing the transaction in mid-June.”
The transaction has received all regulatory approvals and is on track to close on June 16, pending shareholder approval at the reconvened Special Meetings on June 11.