RLJ Lodging Trust acquires FelCor Lodging Trust Inc

FelCor aquisition makes RLJ Lodging Trust on of the biggest REITs in the U.S.

RLJ Lodging Trust said on Monday it would buy peer FelCor Lodging Trust Inc, making it one of the biggest U.S. lodging real estate investment trusts (REIT)s.

The combination, which will have a pro-forma market value of US$4.2 billion and an enterprise value of US$7 billion, will own 160 hotels in 26 states and the District of Columbia, across brands including Marriott, Hilton, Hyatt and Wyndham.

Under the deal, each FelCor share will be converted into 0.362 shares of newly issued shares of RLJ common stock in a taxable merger.

Based on the RLJ’s Friday closing, the offer values FelCor at US$1.18 billion, or US$8.54 per share, representing a premium of 16.7 percent.
RLJ’s shareholders are expected to own about 71 percent of the combined company, while FelCor’s shareholders are expected to own the rest, the companies said.

Robert L. Johnson, Executive Chairman of RLJ Lodging Trust, stated, “As Chairman of RLJ Lodging Trust, I would like to say that we are very excited about this combination with FelCor. I am confident that, under the management of our seasoned team of executives, this portfolio will yield significant benefits to the shareholders of both companies.”

The RLJ-FelCor deal will create annual cost savings of about US$22 million from the elimination of duplicate corporate general and administrative expenses.

Source: Reuters