Blackstone, Starwood Boost Offer to Buy Extended Stay After Investor Opposition

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Blackstone Group and Starwood Capital Group boosted their $6 billion bid to buy Extended Stay America as a growing number of the hotel operator’s investors came out against the deal.

The joint venture announced Tuesday that it upped its bid for Extended Stay by $1 per share to $20.50, which it called its “best and final offer.” That price is a 21 percent premium over Extended Stay’s closing share price of $16.94 just before the sale was announced and only slightly above its current $19.87 price.

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Extended Stay’s boards both unanimously approved the higher-valued deal.

“I believe this revised offer from Blackstone and Starwood Capital reflects a uniquely compelling value proposition for our shareholders and is superior to any viable alternative for the company,” Bruce Haase, CEO and president of Extended Stay, said in a statement.

In March, Blackstone and Starwood announced plans to acquire equal stakes in the Extended Stay chain, which targets longer-term guests than traditional hotels, and has 564 properties around the country and another 86 franchises.

While the pandemic has battered the hospitality industry, Extended Stay fared better than most with a 74 percent occupancy rate last year, above the national average of 44 percent, The Wall Street Journal reported.

However, several Extended Stay investors came out against the deal, arguing that the $6 billion price undervalues the chain and questioning the timing of the sale before an expected post-pandemic surge in travel.

Last week, two prominent shareholder advisory firms — Institutional Shareholder Services and Glass Lewis & Co.urged others to oppose the deal, echoing concerns about its price and timing, Bloomberg reported.

The increased bid for Extended Stay still needs shareholder approval, but the deal’s expected to close later this month if given the go-ahead.