Blackstone to acquire La Quinta hotel chain

NEW YORK—

Hotel chain La Quinta Properties Inc. has agreed to be acquired for the equivalent of $ 2.7 billion ( Canadian) in cash by Blackstone Group LP, as lodging companies continue to lure deep- pocketed investors. The $ 2.28 billion ( U. S.) deal is the latest in a series of recent mergers and acquisitions in the sector. Hotel companies have attracted investors because of strong demand that has boosted room rates as well as the potential value of the real estate. The takeover offer is $ 11.25 in cash per paired share, representing a 37 per cent premium over Tuesday’s closing price of $ 8.22 a share. Including about $800 million in debt and additional transaction costs, the deal is worth $ 3.4 billion, the companies said.

In June, Blackstone bought hotel owner and franchiser Wyndham International Inc. for $1.44 billion in cash. The group later agreed to sell the Wyndham brand and franchise system to leisure conglomerate Cendant Corp. But La Quinta chairman and chief executive Francis ( Butch) Cash said Blackstone plans to keep intact the chain of more than 590 owned and franchised limited- service hotels, which also operate under the Baymont, Woodfield and Budgetel brands.

“ Blackstone has no intention of selling off the real estate,” he said during a conference call with reporters. “ They love the brand, they love our franchising program and they’ll probably want to accelerate” growth. CIBC analyst David Katz said Blackstone could combine La Quinta with some of its other major hotel investments, which include Boca Resorts and Extended Stay America Hotels, with an eye to eventually floating the package on the market.