Extended Stay America Urges Shareholders to Vote FOR Transaction With Blackstone and Starwood Capital
Special Meeting to Approve Transaction Will Be Held This
Leading Independent Proxy Advisor ISS Recommends Shareholders Vote in Favor; Board Unanimously Agrees
Shareholders Should Consider Meaningful Downside Risk if the Transaction is Not Approved, Which Has Been Acknowledged by Independent Third Parties
Extended Stay shareholders are reminded that their vote is extremely important, no matter how many shares they own. Failure to vote or an abstention from voting will have the same effect as a vote against the transaction. Shareholders who have not yet voted are strongly encouraged to vote their shares in favor of the transaction on the
The full text of Extended Stay’s letter to shareholders follows:
Dear Extended Stay America Shareholders,
With only a few days before our special meeting, now is the time to vote on the WHITE proxy card FOR the certain, immediate, and compelling cash value transaction with
Our Boards have explored numerous value-enhancing alternatives over several years and unanimously concluded that this transaction represents the best possible outcome for Extended Stay shareholders. ISS, a leading independent proxy advisory firm, has recommended shareholders vote in favor of the transaction. We urge all shareholders to vote FOR the transaction on the WHITE proxy card no matter how many shares they own.
To put it simply, the stakes could not be higher.
- Shareholders should seriously consider the meaningful downside risk to the share price – recognized by independent third parties – if the transaction is not approved. Independent sell-side research firm Jefferies concludes, “Absent a deal, shares of STAY have the potential to trade into the
$15-$16range temporarily, roughly 24% lower than the proposed offer, in our view.”1
And the risk of value destruction under an independent approach governed by Tarsadia is high.
- Tarsadia’s latest suggestion to hang their hat on “a new and robust [sale] process, overseen by a refreshed and independent Board” is the latest in a string of self-serving and inconsistent arguments attempting to ultimately seat their directors and implement a thesis that each of the Company’s current directors is convinced would destroy value for shareholders.
In contrast, this transaction delivers significant value, right now, and we are convinced it is a better alternative to all other potential outcomes.
$20.50per paired share offer delivers a meaningful premium to shareholders across multiple time horizons and values our paired shares at a 59% premium to their pre-pandemic value. It also values the Company at 16.0x 2020 EBITDA, 13.4x 2021 estimated consensus EBITDA and 11.9x 2022 estimated consensus EBITDA, all of which represent significant premiums to where Extended Stay has traded in its time as a public company (9.5x 5-year average NTM EBITDA trading multiple prior to the pandemic).
$20.50per paired share consideration offers a 21.0% premium over the closing price of $16.94on March 12, 2021, the last trading day prior to the announcement. We also note that the transaction represents an implied 30.3% premium, which ranks in the 81st percentile of precedent REIT all-cash transactions since 2013, based on the extrapolated Extended Stay stock price since the March 15, 2021announcement over which time lodging companies had traded down 7.1%.2
Thank you for your support. And please vote the WHITE card FOR this value-creating transaction.
To follow the recommendations of ISS and the Company’s Boards, shareholders should vote “FOR” the proposal on the WHITE proxy card today to approve the transaction and secure the certain, immediate and compelling value of
If you have any questions, or need assistance in voting your shares, please immediately contact
About the Company
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in respect of the proposed acquisition of
Certain statements contained in this document constitute “forward-looking statements” within the meaning of the federal securities laws. All statements other than statements of historical facts included in this document may be forward-looking, including statements regarding, among other things, the Companies’ ability to meet their debt service obligations, future capital expenditures (including future acquisitions and hotel renovation programs), their distribution policies, their development, growth and franchise opportunities, anticipated benefits or use of proceeds from dispositions, their plans, objectives, goals, beliefs, business strategies, business conditions, results of operations, financial position and business outlook, business trends and future events, including the COVID-19 pandemic, its effects on the foregoing, government actions taken in response to the COVID-19 pandemic and actions that the Companies have taken or plan to take in response to the pandemic and such effects. When used in this document, the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “will,” “look forward to” and variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts, and are based upon the Companies’ current expectations, beliefs, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond their control. There can be no assurance that management’s expectations, beliefs, estimates and projections will be achieved, and actual results may differ materially from what is expressed in or indicated by the forward-looking statements.
There are a number of risks, uncertainties and other important factors, many of which are beyond the Companies’ control, that could cause their actual results to differ materially from the forward-looking statements contained in this communication. The potential risks and uncertainties include, among others, the possibility that
1 Permission to quote neither sought nor given
2 Reflects STAY’s share price extrapolated based on undisturbed price of
Source: Extended Stay America, Inc.