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,
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