Two ESA directors are against $ 6 billion sale to Starwood Capital and Blackstone

George Sell George Sell Uploaded 16 April 2021

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US: Two directors of Extended Stay America's real estate trust board are against the company's proposed sale, according to an SEC filing.

The company disclosed in a regulatory filing this week that while the majority of the board approved the deal with Blackstone Group Inc. and Starwood Capital Group, Neil Brown and Simon Turner opposed it, saying the $19.50 share price was insufficient, and below similar transactions in recent years.

Brown specifically criticised the timing of the deal, as travel stocks were beginning to rebound in his opinion.

Turner believes a transaction below $20 a share is inappropriate, and was also concerned about changes to the termination fee that were made in order for the buyers to raise their bid to $19.50 a share from $19.25, according to the filing.

The concerns raised by the two directors are similar to those of five top investors who spoke out against the deal last month.

The filing also revealed that Starwood Capital expressed interest in a potential bid for ESA of between $22 and $24 per share as far back as July 2017.

Blackstone then made an offer of $19.50 per share, which it raised to $20.75 per share, but Extended Stay America’s rejected the proposal for being too low.

Extended Stay America continued acquisition talks into 2018 and 2019 with Blackstone as well as two unnamed hotel companies, according to the filing.

 

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