BETHESDA, MD—Pebblebrook Hotel Trust has filed a preliminary proxy statement with the United States Securities and Exchange Commission (SEC) to urge shareholders of LaSalle Hotel Properties to vote with Pebblebrook against LaSalle’s merger agreement with BRE Landmark LP (BRE), an affiliate of The Blackstone Group LP, at a price of $33.50 per share.
LaSalle, owner of 41 luxury hotels, previously received numerous offers from Pebblebrook Hotel Trust. Pebblebrook’s post-acquisition plan was to form a portfolio of upscale hotels in order to compete with REITs.
“The board of Pebblebrook continues to believe that its offer is substantially superior to LaSalle’s merger agreement with Blackstone and represents the greatest value-maximizing opportunity for the shareholders of both LaSalle and Pebblebrook,” said Jon Bortz, chairman, president and CEO of Pebblebrook Hotel Trust. “The shareholders of LaSalle wholeheartedly agree with us as LaSalle’s shares continue to trade at prices well above Blackstone’s take-under price of $33.50. As presented in the LaSalle proxy, the LaSalle Board’s only rationale for not accepting our offer as superior, despite our much higher offer price, was a concern over certainty. Pebblebrook strongly disagreed with the LaSalle Board’s decision at the time, and given the trading prices and volume of LaSalle shares since the announcement of the Blackstone deal, it is even more clear today that Pebblebrook’s offer is superior.”
Bortz continued, “The facts and circumstances have changed materially since the LaSalle Board decided to reject our higher offer—since the announcement of the Blackstone agreement, over 100 million LaSalle shares have traded, and all above $33.50. Over that same period, over 30 million LaSalle shares have traded over $35.00. The trading activity in LaSalle shares after the Blackstone announcement means that any shareholder who wanted certainty at $33.50 has had the opportunity to realize that value or more, an opportunity that continues today.”
According to Bortz, repeated efforts were made to engage with LaSalle to no avail. As a result, a preliminary proxy statement was filed to solicit shareholders to vote against the Blackstone merger agreement.
“We believe LaSalle’s board should reconsider the agreement with Blackstone in accordance with its ongoing fiduciary duties and recognize their shareholders’ clear preference for the immediate higher incremental value and future upside potential of Pebblebrook’s current outstanding offer, and deem Pebblebrook’s current offer superior today,” he said. “If the LaSalle Board fails to meet its ongoing fiduciary duties and continues to recommend the lower Blackstone take-under agreement, and LaSalle proceeds to a proxy vote, then a vote with us against the Blackstone agreement would send a clear message to the LaSalle board that LaSalle shareholders prefer the Pebblebrook offer.”
Pebblebrook previously made proposals—the first on March 6—to the LaSalle board regarding a merger transaction, to make LaSalle a wholly owned subsidiary of Pebblebrook. On May 21, LaSalle revealed it had entered into a merger agreement with BRE Landmark LP, an affiliate of The Blackstone Group LP, at a price of $33.50 per share in cash, a lower share price than the value of Pebblebrook’s offer, and below LaSalle’s current share price, according to the company.
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.