REIT Merger

Ashford Hospitality Trust Makes Offer for FelCor Lodging Trust

Combined company would result in the third-largest pure-play publicly traded lodging REIT by enterprise value

FelCor

Ashford Hospitality Trust (NYSE:  AHT) announced today that it has submitted a non-binding proposal to acquire FelCor Lodging Trust (NYSE:  FCH) for a total consideration of $9.27 per share, based on closing prices as of February 17, 2017. FelCor shareholders would receive a fixed exchange ratio of 1.192 shares of Ashford Trust, a total of 400,000 shares of Ashford Inc. (NYSE MKT: AINC), and a total of 100,000 warrants to purchase Ashford Inc. shares. This offer, based on Ashford Trust's written non-binding proposal to FelCor's Board of Directors on February 21, 2017, represents a substantial premium of 28% over FelCor's current stock price of $7.23 on February 17, 2017, a 23% premium to the 10-trading day volume weighted average price, and an 11% premium to FelCor's 52-week high closing stock price of $8.34 on December 14, 2016.

Ashford Trust believes that the proposed combination has compelling strategic, operational, and financial merit, presenting the shareholders of FelCor and Ashford Trust with a significant value creation opportunity. The combined company would be the second-largest pure-play publicly traded lodging REIT by room count and the third-largest by enterprise value. 

Ashford Trust has attempted to conduct good faith discussions with FelCor since early October 2016. However, even with a fully-executed non-disclosure agreement in place, FelCor has failed to meaningfully engage and has refused to provide customary information, including historical property level financial information, hotel management contracts, franchise/license agreements, consolidated financial projections, and other documents on Ashford Trust's customary due diligence request list, which information would allow Ashford Trust to fully evaluate this significant opportunity to unlock value for shareholders of both companies. As a result, Ashford Trust, in consultation with its financial and legal advisors, has now decided to make the proposal public in order to inform FelCor's shareholders of its intent.

"The benefits of this proposal are compelling. We believe the combination would provide significant strategic and financial benefits to both sets of shareholders and create a clear path towards considerable long-term value creation far in excess of FelCor's standalone prospects. Ashford Trust has a proven, long-term track record of delivering substantial returns to shareholders through a wide variety of strategic initiatives, including transformative transactions, and we believe shareholders will view our proposal favorably. While it remains our strong desire to reach an agreement with FelCor on a friendly basis, we are fully committed to pursuing this transaction and are prepared to take all necessary steps to complete it, including nominating a slate of independent directors to ensure that FelCor appropriately considers our proposal," said Benjamin J. Ansell, Lead Director of Ashford Trust.

In a letter to FelCor's Board of Directors, Ashford Trust detailed the potential strategic and financial benefits of the proposed combination, including:

  • Significant value creation potential for both sets of shareholders; 
  • Operational and G&A efficiencies; 
  • Creation of the third largest pure-play lodging REIT by enterprise value with a larger and more diversified portfolio of 159 properties and 36,657 keys, limiting exposure to market specific volatility; 
  • Enhanced scale of combined platform should enable a larger equity float and trading volume that could lead to multiple expansion with increased growth opportunities and broad-based access to multiple sources of capital; 
  • Strong balance sheet; 
  • Leading management team at Ashford Trust with proven track record of delivering significant shareholder returns; 
  • Strong alignment of interest with management through high insider ownership, backed by shareholder friendly corporate governance; and 
  • A clear and credible strategy for the pro forma combined company.



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