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Extended Stay Jumps on Blackstone-Starwood Buyout Pact at $6B

Blackstone and Starwood Capital teamed to buy hotel owner Extended Stay America, a deal valued at $19.50 a share, or $6 billion, cash.
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Blackstone Group  (BX) - Get Blackstone Group Inc. Class A Report and Starwood Capital teamed to purchase hotel owner Extended Stay America  (STAY) , a deal valued at $19.50 a share, or $6 billion, cash. 

Shares of Extended Stay, Charlotte, at last check were up 15% at $19.40.  

The purchase price reflects premiums of 23% to the stock's 30-day average price and 15% to its closing price on Friday. 

"After a thorough review of the company’s business plan, the boards concluded that the immediate cash premium offered by this transaction is compelling for stockholders," Doug Geoga, Extended Stay's chairman, said in a statement.

Last year, Starwood purchased an 8.5% stake in the company for $136.8 million, or $9.05 a share. Blackstone purchased a 4.9% stake for about $6.50 a share in 2021. 

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Blackstone, the New York private-equity group, acquired Extended Stay America for about $2 billion in 2004. Three years later it sold the portfolio to Lightstone Group for $8 billion. 

In 2010, Blackstone took Extended Stay out of bankruptcy, paying $3.9 billion and outbidding Starwood in the process. Blackstone then took it public in 2013. 

Travel and leisure is one of Blackstone’s highest conviction investment themes, and we have confidence in the extended-stay model," said Tyler Henritze Blackstone Real Estate's head of U.S. acquisitions. 

"We helped create this company nearly 20 years ago, and believe our expertise puts us in a unique position to add long-term value." 

Extended Stay will be acquired by a 50-50 joint venture of Blackstone and Starwood, the Miami Beach investment firm.

The Extended Stay board has approved the terms. The acquirers have arranged financing. The acquisition is expected to close in the second quarter, subject to conditions including a vote of Extended Stay holders.