The Weisman Group has made an unsolicited offer to acquire Ashford Hospitality Prime—a U.S.-based real estate investment trust that has been "under pressure by activist investors" in recent months—for an estimated $735 million in cash.
According to a regulatory filing, Los Angeles-based Weisman made the offer in a letter to Ashford Hospitality Chairman and CEO Monty Bennett. Weisman would pay $20.25 a share in cash for the common shares and about $25 a share for preferred stock. Including the assumption of debt, the deal is valued at $1.48 billion. Ashford Hospitality jumped 30 percent Wednesday, giving it a market value of about $419 million.
In a statement, Ashford Prime's board of directors and management team claimed that they were "committed to acting in the best interest of all Ashford Prime stockholders. Consistent with its fiduciary responsibilities, Ashford Prime’s board of directors, in consultation with its independent financial and legal advisors, will carefully review and evaluate The Weisman Group’s proposal to determine the course of action that the board of directors believes serves the best interest of the company and its stockholders."
In early April, Ashford said it had wrapped up its review of strategic alternatives for the company, with its board ruling out a sale after receiving interest from several buyers. Ashford had said it received "indications of interest" from potential buyers to acquire the company, but none of the indications was at levels that the independent directors believed would “provide adequate value to stockholders.”
Weisman had a 4.9-percent stake in Ashford Hospitality as of April, making it the company’s sixth-biggest shareholder. Anonymous sources have claimed that at least two other top-10 holders support the bid.
Yossi Malka, a Weisman Group executive, said the firm is committed to its offer price and that an unidentified bank is providing financing for the deal.
Ashford Hospitality is a Dallas-based real estate investment trust that has invested in 11 U.S. luxury hotels and resorts. Recently, the company had been been involved in a "proxy fight" with shareholder Sessa Capital for control of its board. Sessa had also argued that a termination fee owed to Ashford’s external manager—whose chief executive is also Ashford’s CEO—was keeping the company from pursuing a sale that might benefit stockholders. Sessa said officials were entrenched and the stock undervalued.
On his Twitter page, Bennett referenced the case when he said that "activist #investors often destroy #shareholder value when they take board seats."
A three-judge panel for the U.S. court of appeals struck down Sessa’s emergency motion to postpone the annual meeting scheduled for June 10, and its slate of candidates remains invalid, Ashford Hospitality said in a statement last week.