The Real Deal New York

LaSalle mulls other offer as Blackstone refuses to up $3.7B bid

Blackstone and Pebblebrook have been in a bidding war over the hotel REIT for months
August 27, 2018 03:00PM

Blackstone’s Stephen Schwarzman (yellow), Pebblebrook’s Jon Bortz (purple), LaSalle’s Michael Darnello (blue), and Park Central Hotel at 870 7th Avenue (Credit: Getty, Pebblebrook, and JBS Project Management)

Blackstone Group isn’t budging on its $3.7 billion bid for LaSalle Hotel Properties, prompting the real estate investment trust to consider another offer.

Maryland-based Pebblebrook Hotel Trust, which has long sought to buy the luxury hotel company, made a bid last week that LaSalle’s board unanimously agreed may lead to a superior proposal, Bloomberg reported.

LaSalle agreed in June to be bought by Blackstone for $33.50 a share. If the deal falls through, Blackstone will walk away with a $112 million severance fee.

“There can be no assurance that the discussions with Pebblebrook will result in the board’s determination that the Pebblebrook proposal is a superior proposal or the consummation of a transaction that is superior to the pending transaction with Blackstone,” LaSalle said in a statement to Bloomberg. But the firm added that it is now able to “engage in discussions with Pebblebrook in accordance with the terms of the Blackstone merger agreement.”

Pebblebrook, which already owns 9.8 percent of LaSalle, most recently offered investors 0.92 common share and the option of $37.80 per share in cash for up to 30 percent of the deal. That offer pencils out to $35.09 a share, according to Bloomberg. LaSalle denied an earlier proposal from Pebblebrook, which set the merger price at $35.89, before agreeing to the Blackstone bid.

Two shareholder-advisory groups — Institutional Shareholder Services Inc. and Glass, Lewis & Co. — last week recommended opposing Blackstone’s bid, have further

bolstered Pebblebrook’s chance of takeover, according to the outlet. [Bloomberg] —David Jeans