The board of directors of FelCor Lodging Trust Incorporated (NYSE:FCH) has been put on the spot by Harwood Feffer LLP with investigations regarding the proposed acquisition of the Company by RLJ Lodging Trust. The terms of acquisition dictate that RLJ and FelCor would become a combined entity at an approximate cost of $7 billion and in an all-stock transaction.
The post-merger would require RLJ to have an approximation of $4.2 billion as a pro forma impartiality of market capitalization. In what seems like support for the merger, Executive Chairman of RLJ Lodging, Robert L. Johnson says, “We are very excited about this combination with FelCor…under the management of our seasoned team of executives, this portfolio will yield significant benefits to the shareholders of both companies.”
The merger institutes the third biggest pure-play lodging REIT by enterprise value
The Boards of both companies unanimously approved what can be described as a strategic merger. According to Steven R. Goldman who is FelCor’s Chief Executive Officer, the combination will create a kind of portfolio of a hotel-focused real estate in-class platform. The entity, which will result in a company that has greater reach in key markets will be the country’s third-largest lodging REIT by activity value.
RLJ’s President and Chief Executive Officer, Ross H. Bierkan says that they are well-positioned to offer long-term growth, which will in return produce considerable shareholder value. The merger is also expected to help in the expansion of RLJ’s geographic footprint in highly-attractive markets on the West Coast as well as the coastal markets in the East and the South.
Strategic benefits from the merger and its leadership
There are a lot of benefits that the merger could bring on board the likes of an enhanced positioning of brands. It will incorporate 160 hotels in 26 states including Washington D.C. From the future perspective, the merger has redevelopment opportunities, which will bring forth refined portfolio.
The new entity will continue being under the leadership Johnson being the Executive Chairman, which Bierkan will serve as the President and Chief Executive Officer. The company’s headquarters will remain in Bethesda, Maryland. Nonetheless, the two companies will continue to follow their respective dividend policies till at a time when the transaction has been closed.
In the meantime, RLJ’s stock closed at $22.12 a fall of $1.48 or 6.27%, while that of FelCor closed at $7.90 witnessing an increase of $0.58 or 7.92%.
