LaSalle Reviewing New, Higher Offer As Pebblebrook Looks To Outbid Blackstone
Pebblebrook Hotel Trust Monday announced it submitted a new offer to buy LaSalle for $37.80 per share, higher than any previous offer. LaSalle released a statement following the announcement saying its board is reviewing Pebblebrook's offer.
Blackstone reached a deal May 21 to acquire LaSalle in an all-cash transaction for $33.50 per share, a roughly $4.8B valuation, but that deal has yet to close. Pebblebrook submit a bid during that negotiation process for $35.89/share, with 20% in cash and the rest with its own stock, similar to the three previous offers it had made. Pebblebrook's latest offer is still mostly using its own shares, rather than cash.
LaSalle has signaled it prefers the stability of an all-cash offer, given that the value of Pebblebrook's shares could drop ahead of the deal closing.
The latest proposal still offers mostly stock, but allows LaSalle shareholders to receive $37.80/share in cash for up to 20% of their shares. Pebblebrook said its latest offer takes into account the $112M fee LaSalle would have to pay to back out of its Blackstone agreement.
The new proposal was widely expected given that LaSalle's stock was trading above the value of Blackstone's offer, Robert W. Baird Senior Research Analyst Michael Bellisario said. He said Pebblebrook's latest offer represents the same stock exchange ratio, 0.92, as its previous bid but is effectively higher because it incorporates the $112M fee. Additionally, Pebblebrook's share price has risen since the last offer.
"We believe LaSalle's board will now need to more seriously consider Pebblebrook's offer given the meaningful increase in Pebblebrook's stock price (and implied consideration for LaSalle) since the 0.9200 fixed exchange ratio offer was last presented," Bellisario said in a statement.
It remains to be seen whether that higher price tag will make it worth the risk for LaSalle's board of forgoing an all-cash offer, but Pebblebrook has signaled it is not backing down.
“Our offer is without a doubt a superior proposal to the sale agreement LaSalle executed with Blackstone,” Pebblebrook CEO Jon Bortz said in a release. “It provides both immediate and long-term value for LaSalle shareholders who will be able to benefit from the improving industry fundamentals in this already strong travel environment."
LaSalle, a Bethesda-based REIT, owns 41 properties totaling over 10,000 rooms in 11 markets, including nine in D.C. Citigroup Global Markets and Goldman Sachs are acting as its financial advisers, with Goodwin Procter and DLA Piper serving as its legal counsel.