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LaSalle rejects revised Pebblebrook offer, affirms support for Blackstone deal

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Capital Markets View – January 2021


LaSalle rejects revised Pebblebrook offer, affirms support for Blackstone deal

The board of trustees of LaSalle Hotel Properties said the revised offer submitted by peer Pebblebrook Hotel Trust on June 11 could not lead to a "superior proposal" as defined in its merger agreement with affiliates of Blackstone Group LP's Blackstone Real Estate Partners VIII.

LaSalle agreed to be acquired by the Blackstone entities for $33.50 per share for total cash consideration of $4.8 billion. It rejected three other Pebblebrook proposals that came before the latest offer with an implied price of $37.80 per share.

In a release, LaSalle said Pebblebrook's proposal, composed of 80% stock consideration, does not address the "significant" price risks and uncertainties that LaSalle shareholders would face in the event of a decline in Pebblebrook's share price between the signing and closing of a potential deal. Pebblebrook continues to refuse a pricing collar or similar pricing protection mechanism, LaSalle added.

LaSalle's board also deemed Pebblebrook's latest offer to be substantially similar to a proposal submitted May 19 that was already evaluated alongside Blackstone's offer. In addition, the immediate and certain cash value of the Blackstone transaction was considered by the board to be in the best interest of LaSalle shareholders.

In a separate release, Pebblebrook reiterated its offer and said it had almost doubled its ownership of LaSalle's common stock to 10.0 million shares, or 9.0%, of its outstanding stock.

LaSalle said its board has filed a preliminary proxy statement stating its unanimous recommendation for shareholders to approve the Blackstone deal.

Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC are LaSalle’s financial advisers, and Goodwin Procter LLP and DLA Piper LLP (US) are its legal counsel.