Hedge fund HG Vora Capital Management LLC on Monday (April 2) urged LaSalle Hotel Properties Inc to negotiate with fellow US hotel owner Pebblebrook Hotel Trust for a better offer after taking about 7.1% stake in LaSalle.
Pebblebrook had last week disclosed that it had offered to buy LaSalle in an all-stock deal that valued the company at more than $3 billion. The offer was rejected by LaSalle's board.
Shares of LaSalle rose about 1% to $29.28 in premarket trading, giving the company a market capitalisation of about $3.31 billion.
In a letter to LaSalle's management, founder of the hedge fund, Parag Vora, said Pebblebrook's initial offer was "inadequate", but presents a "compelling" opportunity for a more efficient cost of capital and stronger cash flows.
If the two hotel owners merge, it would form the second-biggest lodging real estate investment trust by equity market capitalisation in the US.
"We believe a sale of the entire company would maximise value for shareholders," Vora said, after his hedge fund became the third biggest shareholder in LaSalle.
Vora urged LaSalle, owner of Park Central San Francisco and Westin Michigan Avenue, to form an independent strategic committee to negotiate with Pebblebrook and gauge interest from other potential buyers.
News by Reuters, edited by Hospitality Ireland
