Pebblebrook Increases Bid For LaSalle

BETHESDA, MD—With a shareholder vote scheduled in a few weeks on a merger deal with rival Blackstone, Pebblebrook Hotel Trust has once again enhanced its merger offer for LaSalle Hotel Properties.

Pebblebrook’s latest merger offer came in the form of a letter to the LaSalle Board of Trustees dated Aug. 21. Pebblebrook says that the enhanced offer that increases the cash component of the deal would remain in place if LaSalle shareholders reject Blackstone’s offer to take the hotel REIT private in a deal valued at $33.50 a share or approximately $4.8 billion. LaSalle shareholders are scheduled to vote on the Blackstone merger proposal on Sept. 6.

LaSalle has spurned multiple offers by Pebblebrook and on May 21 announced it had reached a merger agreement with Blackstone.

The enhanced offer, unanimously approved by the Pebblebrook Board of Trustees, increased the number of LaSalle common 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,” says Jon E. Bortz, chairman, president and CEO of Pebblebrook Hotel Trust.

The increased cash component in Pebblebrook’s offer appears to be in response to LaSalle’s preferences, clearly stated back in May when LaSalle announced its agreement with Blackstone. Stuart L. Scott, chairman of the board of LaSalle, stated at the time,  “After careful consideration of multiple proposals received, the board determined that this (Blackstone) transaction represents the most compelling opportunity for LaSalle’s shareholders, delivering a significant premium with immediate and certain cash value.”

Raymond James and BofA Merrill Lynch are acting as financial advisors, Hunton Andrews Kurth LLP is acting as legal counsel and Okapi Partners LLC is serving as information agent to Pebblebrook in connection with the proposed transaction.

LaSalle confirmed receipt of the latest Pebblebrook proposal and stated that it would carefully review Pebblebrook’s proposal to determine the course of action that it believes is in the best interest of the company’s shareholders.

“The Board has not changed its recommendation of the existing transaction with Blackstone or made any determination as to whether Pebblebrook’s proposal constitutes, or could reasonably be expected to lead to, a ‘Superior Proposal’ under the terms of the Blackstone merger agreement,” LaSalle states. The LaSalle board expects to respond to Pebblebrook’s proposal.

LaSalle advised its shareholders to take no action at this time.

Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC are acting as financial advisors to LaSalle and Goodwin Procter LLP and DLA Piper LLP (US) are acting as legal counsel.

LaSalle Hotel Properties owns 41 hotels. The properties are upscale, full-service hotels, totaling approximately 10,400 guest rooms in 11 markets in seven states and the District of Columbia. Some of its more notable properties include the Park Central in New York City, Westin Copley Place in Boston and the Viceroy Santa Monica.