Ashford Hospitality Gets $735 Million Weisman Offer

  • Company to review the unsolicited, $20.25-a-share proposal
  • Hotel owner has been under pressure by activist investors

Ashford Hospitality Prime Inc., a U.S. hotel owner that has been under pressure by activist investors, received an unsolicited offer from the Weisman Group to buy the company for about $735 million in cash.

Weisman, an investment group based in the Los Angeles suburb of Sherman Oaks, made the offer in a letter Tuesday to Ashford Hospitality Chief Executive Officer Monty Bennett, according to a regulatory filing Wednesday. Weisman would pay $20.25 a share in cash for the common shares and about $25 a share for preferred stock. 

The price for the common shares is 79 percent more than Tuesday’s closing price of $11.32. 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.

Ashford, which completed a strategic review in April, said in a statement Wednesday that it will carefully review the proposal. Weisman had a 4.9 percent stake in Ashford Hospitality as of April, making it the company’s sixth-biggest shareholder, according to data compiled by Bloomberg. At least two other top-10 holders support the bid, according to people with knowledge of the matter, who asked not to be identified because it is private.

Yossi Malka, a Weisman Group executive, said the firm is “not dead set” on its offer price and wants to reach a deal in a friendly manner.

“We have nothing personal against Monty Bennett at all,” Malka said in an interview. “We have to see where this is going.”

An unidentified bank is providing financing for the deal, according to Malka.

Proxy Fight

Ashford Hospitality, a Dallas-based real estate investment trust that has investments in 11 U.S. luxury hotels and resorts, has been dogged by a proxy fight with shareholder Sessa Capital for control of its board. Sessa criticized a fee the REIT must pay its adviser, Ashford Inc., should it terminate their advisory agreement, as opaque and excessive. That fee would be as much as $5 a share, according to Sessa, an agreement the activist argues may undermine a sale of the REIT.

Sessa has also argued that Ashford Hospitality has used that termination fee to deter shareholder director nominees, issued shares to buy a costly property and overpaid for Ashford Inc. stock -- moves it described as having “exacerbated the conflicts of interest inherent in Ashford Prime’s organizational structure” and affiliation with its adviser.

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.

(Official corrects to say unidentified bank providing financing for the deal in seventh paragraph.)
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