The pricing fell below the initial $18 to $21 per share it anticipated in March in regulatory filings, putting an equity value on the chain of up to $2.5 billion. At $17 per share, La Quinta will have a market value of around $2.1 billion.
The chain is going to sell 38.25 million shares, raising about $618 million after underwriter discounts and commissions. The company is going to use the proceeds to pay down about $2.7 billion in long-term debt.
Its stock opened Wednesday below pricing at $16.75 per share on the New York Stock Exchange.
WATCH: More market videos from TheStreet TV The underwriters hold a 30-day overallotment option to buy up to an additional 5.7 million shares. Blackstone is going to own a 64% stake in La Quinta after the offering is completed, assuming the underwriters exercise their option. Irving, Texas-based La Quinta operates 834 hotels, most of them franchised, that hold more than 84,000 rooms across North America, Mexico, Colombia and Honduras. In 2013, La Quinta generated an adjusted Ebitda of $326.8 million on $873.9 million in revenue compared to an adjusted Ebitda of $297.8 million on $818 million in revenue for 2012. Blackstone acquired La Quinta in 2006 for $3.4 billion in cash and debt. The private equity firm has had a field day with hotel properties as the travel industry, especially for bread-and-butter business travelers, revived during the recovery. Last year, Blackstone took both Extended Stay America Inc. and Hilton Worldwide Holdings Inc. public. JPMorgan Chase & Co., Morgan Stanley, Bank of America Merrill Lynch, Citigroup Inc., Credit Suisse Group, Deutsche Bank Securities Inc., Goldman, Sachs & Co. and Wells Fargo Securities LLC are joint bookrunners on the offering. La Quinta said it expects to complete the offering by April 14.
Select the service that is right for you!COMPARE ALL SERVICES
- $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
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV