Shareholder advisory firm Glass Lewis & Co has recommended that shareholders of hotel owner LaSalle Hotel Properties (LHO.N) oppose the buyout by private equity firm Blackstone Group LP (BX.N), in a victory for LaSalle’s unwelcome suitor Pebblebrook Hotel Trust (PEB.N).
Blackstone’s $3.7 billion all-cash offer is facing a wave of fresh uncertainty as Pebblebrook on Tuesday stepped up its overtures with a higher offer to LaSalle’s board of trustees two weeks ahead of the final shareholder vote.
“Under the circumstances, we believe cause exists for investors to question the value offered in LaSalle-Blackstone proposal, and the August 21, 2018 revised offer only bolsters our view as it widens the spread over the board recommended cash offer,” the Glass Lewis report said.
LaSalle, Pebblebrook and Blackstone could not immediately be reached for comment
LaSalle has so far resisted Pebblebrook’s proposals on the basis that the mix of stock and cash in its offer was riskier for shareholders than the outright cash deal offered by Blackstone.
“The LaSalle board has stated it is reviewing Pebblebrook’s revised offer, and in our view, the altered terms provide LaSalle directors an opportunity for further engagement with Pebblebrook,” Glass Lewis said.
The upcoming vote already faced uncertainty given that it a two-thirds majority is required for approval and Pebblebrook had accrued a 9 percent stake in LaSalle, making it the fourth largest shareholder behind hedge fund HG Vora Capital Management, which also backed the unwelcome bid.
For LaSalle, which has interests in hotels including the Park Central San Francisco and Westin Michigan Avenue in Chicago, the Blackstone deal represents “immediate and certain cash value” and is expected to close as early as this month, the company has previously said.
“Pebblebrook’s proposal, which includes 80 percent stock consideration, continues to fail to address the significant price risks and uncertainties for LaSalle shareholders,” LaSalle said in June when siding with Blackstone’s bid.
Influential proxy adviser ISS is expected to release its own recommendation later this week.