BETHESDA, MD—Pebblebrook Hotel Trust is upping the ante in its pursuit of LaSalle Hotel Properties. The latest proposal is a combination of cash and stock detailed in a letter dated Tuesday, which ups the number of LaSalle shares that may receive $37.80 in cash per share to up to 30% of LaSalle common shares in aggregate, representing a 50% increase in the number of shares that may receive cash compared to Pebblebrook’s prior offer.
“The terms of our enhanced offer are clearly superior to the Blackstone proposal, as was our prior offer. It provides enhanced certainty to LaSalle’s shareholders through the increased fixed-cash portion, which also increases the overall value we are delivering to LaSalle’s shareholders,” said Jon E. Bortz, chairman, president/CEO of Pebblebrook Hotel Trust.
This enhanced proposal will remain outstanding following a rejection by LaSalle shareholders of the proposed transaction between LaSalle and affiliates of The Blackstone Group L.P., which is scheduled to be voted on by LaSalle shareholders on Sept. 6.
“We’ve recently entered into an agreement to sell certain LaSalle properties in connection with the closing of a Pebblebrook-LaSalle merger,” said Bortz. “These strategic sales will allow us to continue to focus on properties and markets that are core to our go-forward strategy and also enable us to materially increase the cash component of our offer—and the overall value of our offer—without increasing our leverage compared to our prior proposal. For those who receive Pebblebrook shares, our offer continues to provide significant long-term financial and strategic upside opportunity, as well as increased dividend income, neither of which can be matched by the Blackstone take-under. The proceeds from the asset sales will effectively be delivered back to LaSalle shareholders as a benefit through the increased 30% cash component of our proposal. This proposal is not contingent on those property sales, and Pebblebrook is prepared to move forward immediately upon acceptance of our proposal by LaSalle’s Board. We strongly encourage LaSalle’s Board to engage in discussions with us to execute a merger agreement and seize this unique opportunity to combine our two companies to create the industry leader that shareholders so strongly desire.”
LaSalle has repeatedly rejected offers from Pebblebrook and plans to move forward with the Blackstone Merger Agreement, under which Blackstone will acquire all outstanding common shares of beneficial interest of LaSalle for $33.50 per share in an all-cash transaction valued at $4.8 billion.