Dealmaker: Park Hotels to Buy Chesapeake Lodging Trust for $2.7B
Park Hotels & Resorts, Tysons Va., agreed to buy fellow real estate investment trust Chesapeake Lodging Trust, Arlington, Va., in a $2.7 billion deal.
Upon completion, the combined company’s estimated enterprise value will approach $12 billion, making Park the second-largest lodging REIT.
Under the merger agreement, current Chesapeake shareholders will receive $11 in cash and 0.628 of a share of Park common stock for each Chesapeake share. Based on Park’s closing stock price last Friday, this equals $31.71 per share, a nearly 11 percent premium to Chesapeake’s trailing 10-day average price.
Upon closing, Park stockholders and Chesapeake shareholders will own 84 percent and 16 percent of the combined company, respectively. Both companies expect the transaction will close in late third quarter or early fourth quarter.
Park Chairman and CEO Thomas Baltimore Jr. said Chesapeake’s hotel portfolio will accelerate Park’s strategic goals of upgrading its portfolio and achieving greater diversity of brands and geographies.
Formerly a part of Hilton Worldwide, Park Hotels & Resorts spun off in January 2017. The REIT currently owns 67 hotels. Park plans to sell five non-core hotels prior to the proposed closing, including both of Chesapeake’s New York City hotels (the 122-room Hyatt Herald Square New York and the 185-room Hyatt Place New York Midtown South), in addition to three non-core Park hotels currently under contract. This would leave the company with assets in 17 states and the District of Columbia.
BofA Merrill Lynch and Barclays acted as Park’s financial advisors and Hogan Lovells acted as the firm’s legal counsel. JPMorgan Securities LLC acted as Chesapeake’s financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP and Polsinelli PC served as Chesapeake’s legal counsel.
Park secured a $1.1 billion financing commitment from BofA Merrill Lynch to finance the merger’s cash component and repay Chesapeake’s unsecured term loan and two mortgages.
