Deal Could Signal More Hotel Buyouts
The $19.63-a-share takeout price is fairly rich for a chain whose stock made its debut in 1995 only 16% below its current level, split adjusted. The company has piled on properties at a much better clip than revenue: it went from 392 to 472 in the three years ending in 2003, a period during which revenue rose only 6%. Extended Stay earned $40.4 million in 2003, off 29% from the prior year.
The lackluster performance was reflected in ESA's share price in 2003. While the Dow Jones Hotel and Lodging Index racked up a 50% gain last year, ESA shares fell 1.8%.
But given Blackstone's experience in the sector, the hope is that the sum of the parts it has collected will be worth a more than the premium it paid.
"We are excited to be acquiring Extended Stay America," said Stephen Schwarzman, president and CEO of the Blackstone Group. "This transaction will benefit from our long track record and existing expertise in the hotel sector,
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV