The Real Deal New York

The rose goes to Pebblebrook: LaSalle seeks to break off $4.8B deal with Blackstone

Blackstone will get a $112M breakup fee
By Kathryn Brenzel | September 05, 2018 06:09PM

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)

LaSalle Hotel Properties has reversed course, jettisoning the Blackstone Group’s $4.8 billion offer to acquire the company and instead accepting Pebblebrook Hotel Trust’s bid.

The real estate investment trust announced on Wednesday that Pebblebrook’s bid was a “superior proposal” to the one it had accepted from Blackstone. The REIT has notified Blackstone of its plan to cancel the deal, under which the company would’ve acquired LaSalle for $33.50 per share. As part of its agreement with Blackstone, LaSalle will now be on the hook for a $112 million breakup fee, but Pebblebrook previously indicated that it would cover the severance.

Representatives from Blackstone couldn’t immediately be reached for comment.

Last month, LaSalle officials said that the company was considering Pebblebrook’s latest offer. The Maryland-based company, which already owns 9.8 percent of LaSalle, offered investors 0.92 common share and the option of $37.80 per share in cash for up to 30 percent of the deal. According to Bloomberg, that offer pencils out to $35.09 a share.

For several months, Pebblebrook has been trying to intervene in LaSalle’s deal with Blackstone. LaSalle denied an earlier proposal from Pebblebrook, before agreeing to the Blackstone bid in June. Blackstone could still offer up changes to its offer before the deal is officially canceled.