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IRVING, TX-FelCor Lodging Trust Inc. and MeriStar Hospitality Corp. today retreated from a $2.7-billion merger plan “due to adverse changes in the financial markets,” according to a joint press release. The Sept. 11 terrorists’ attacks in New York City and Washington, DC and the subsequent economic crisis are being blamed.

FelCor, headquartered in Irving, TX and Washington, DC-based MeriStar have consequently have canceled their special stockholders’ meetings. The meetings were set for Oct. 11 and the merger closing to take place a few days thereafter. The merger was on track and officials optimistic that it was a go–until the attacks. Financing and credit facilities too were in place and ready to go.

“The termination of this merger is the result of the recent tragic events and their subsequent adverse impact on the financial markets,” FelCor president and CEO Thomas J. Corcoran Jr. said his prepared statement. “A lot of dedicated people worked very hard on this transaction, but Paul Whetsell of MeriStar and I have agreed to focus now on our respective businesses.” Corcoran was in a meeting in Irving when the news was announced and unavailable for immediate comment on the decision. There is no “break-up fee” associated with the merger termination.

Previously issued earnings for each company also will be adversely impacted, according to the release. The companies’ third quarter conference calls will address the breakup as well as the financial impact to operations.

MeriStar, in the release, says “the REIT’s management team will continue to actively asset manage its portfolio of 112 hotels.” MeriStar Hotels & Resorts is the operator and manager.

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