NEW YORK (Reuters) – Private equity firm Blackstone (BX.N) is joining one of the teams bidding to buy Extended Stay, a source familiar with the situation said on Wednesday, upping the ante in the battle to control the mid-priced U.S. hotel chain.
Blackstone is joining the team led by investment companies Centerbridge Partners and Paulson & Co. That group is bidding against a rival offer from Starwood Capital Group.
The Wall Street Journal earlier reported the news.
An investor group led by David Lichtenstein’s Lightstone Group bought Extended Stay in June 2007. Extended Stay was forced into bankruptcy last year after its projected cash flows declined amid the recession and it could not keep servicing more than $7 billion in debt.
In February, Centerbridge and Paulson & Co agreed to invest up to $450 million in the company once it exits Chapter 11.
However, Starwood Capital said in March it submitted a bid which exceeded that offer, and the hotel firm switched its support to that offer.
A source familiar with the situation said several weeks ago that Extended Stay was favoring a new planned bid from Centerbridge and Paulson. The source described it as slightly better economically than the Starwood bid. (Reporting by Megan Davies. Editing by Robert MacMillan)