Strategic Hotels To Be Acquired By Blackstone In $6 Bln Deal

(RTTNews) - Real estate investment trust Strategic Hotels & Resorts, Inc. (BEE) agreed Tuesday to be acquired by private equity firm Blackstone Group L.P. (BX) for $14.25 per share in an all-cash deal valued at about $6 billion, including outstanding debt.

The deal also includes the acquisition of all of the outstanding membership units of the company's subsidiary, Strategic Hotels Funding L.L.C., not held by the company, for the same amount per unit in cash.

The deal, unanimously approved by the Board of Directors of Strategic Hotels, is expected to close by the first quarter of 2016, subject to approval of Strategic Hotel's stockholders. However, the deal is not subject to a financing contingency.

The offer price or $14.25 represents a premium of about 9.3 percent over the unaffected closing share price of $13.04 on July 22, a day prior to when a media article was issued on a potential deal for the company.

Strategic Hotels & Resorts had confirmed on August 17 that its Board of Directors had retained J.P. Morgan and was exploring possible strategic alternatives for the company, including the potential sale.

"We believe this transaction capitalizes on our unique portfolio, strong asset management platform and continued operating outperformance over the past several years. The board thoroughly considered various alternatives over the course of the past few years, and this all cash offer from Blackstone creates significant stockholder value with a high degree of execution certainty," Strategic Hotels Chairman and CEO Raymond "Rip" Gellein said.

Strategic Hotels, an owner of luxury lodging properties across the U.S., currently owns 17 properties with an aggregate of 7,921 rooms and 847,000 square feet of multi-purpose meeting and banqueting space. It owns high-end properties such as Ritz-Carlton Half Moon Bay in California and Manhattan's Essex House.

It owns hotels operated by Fairmont, Four Seasons, InterContinental, KSL Resorts, Loews, Marriott, Montage Hotels & Resorts, Ritz-Carlton and Westin.

Tyler Henritze, co-head of US acquisitions for Blackstone Real Estate, added, "We are excited about the opportunity to acquire one of the highest quality luxury hotel portfolios in the U.S. As long term investors in the lodging industry, we remain confident in the fundamentals of the sector despite recent market volatility."

BEE closed Friday's regular trading session at $13.60, up $0.08 on a volume of 1.76 million shares, and BX closed at $33.67, up $0.37 on a volume of 3.79 million shares.