The Real Deal New York

After Hilton success, Blackstone makes $4.8B bid to buy LaSalle Hotel Properties

Private equity giant outmaneuvered Pebblebrook Hotel Trust
May 21, 2018 11:10AM

Park Central New York and Jonathan Gray

Park Central New York and Jonathan Gray

Blackstone Group outmaneuvered Pebblebrook Hotel Trust to buy luxury hotel owner LaSalle Hotel Properties with an all-cash bid of $4.8 billion, including debt.

The agreement comes just three days after Blackstone sold its remaining shares in Hilton Hotels, making its investment in the company most profitable leveraged buyout in history at $14 billion.

Blackstone agreed to buy LaSalle at $33.50 per share, or a premium of almost 35 percent above the company’s share price on March 27, Bloomberg reported.

That was the day that Pebblebrook first announced a proposed all-stock deal to buy LaSalle. The company made three public bids, with the last one disclosed on April 24 valuing LaSalle’s shares at $35.44.

Even though Pebblebrook’s proposal is higher than Blackstone’s, LaSalle’s board preferred the certainty of the latter, people familiar with the process told Bloomberg.

“After careful consideration of multiple proposals received, the board determined that this transaction represents the most compelling opportunity for LaSalle’s shareholders, delivering a significant premium with immediate and certain cash value,” LaSalle chairman Stuart Scott said of the Blackstone agreement.

LaSalle owns four hotels in Manhattan, according to its website: Gild Hall, Park Central New York, the Roger and WestHouse.

Blackstone’s offer requires two-thirds support from LaSalle’s shareholders to go forward. The deal is scheduled to be completed in the third quarter.

If LaSalle chose to terminate the deal, it would pay a breakup fee of $112 million. Should Blackstone walk away, it would pay a reverse breakup fee of $336 million, sources said. [Bloomberg]Rich Bockmann