Under the terms of the agreement, Lone Star will acquire all of the outstanding common stock of Lodgian for $2.50 per share in an all-cash transaction. The price represents a premium of approximately 67.2 percent over Lodgian's average closing share price during the trading period of one calendar month prior to January 15, 2010 and 64.3 percent over Lodgian's average closing share price during the trading period of six calendar months prior to January 15, 2010.
Lodgian's Board of Directors has unanimously approved the merger agreement and has recommended approval of the transaction by Lodgian shareholders.
'After careful consideration, and with the assistance of our advisors, Lodgian's Board of Directors determined that a transaction with Lone Star will provide meaningful value and liquidity to our shareholders,' said Daniel E. Ellis, Lodgian president and chief executive officer. 'We believe that Lone Star brings considerable real estate experience and financial strength to our assets, and we look forward to working with Lone Star to transition the business as smoothly as possible.'
'We are pleased to welcome Lodgian to the Lone Star family and look forward to working with their talented team to integrate the business into our portfolio,' said Lone Star Funds' Andre Collin, Senior Managing Director, Real Estate Americas. 'This is a diverse and well-managed hotel business that will complement our existing real estate assets.'
This transaction is not subject to a financing condition, and the purchase price is fully committed. The transaction is expected to close during the second quarter of 2010, subject to approval of Lodgian shareholders at a special meeting and satisfaction of customary closing conditions.
Certain shareholders of Lodgian holding 26.8 percent of the total outstanding common shares have entered into voting agreements under which they have agreed to vote their shares in favor of the merger.
Genesis Capital LLC acted as a financial advisor to Lodgian, and Houlihan Lokey Howard & Zukin Financial Advisors, Inc. has provided a fairness opinion to the Board of Directors of Lodgian. King & Spalding LLP is acting as legal counsel to Lodgian, and Hunton & Williams LLP is acting as legal counsel to Lone Star. Dana Ciraldo, previously affiliated with Hodges Ward Elliott, is acting as financial advisor to Lone Star.
Lone Star is a global investment firm that acquires debt and equity assets including corporate, commercial real estate, single-family residential, and consumer debt products, as well as banks and asset-rich operating companies requiring rationalization. Since the establishment of its first fund in 1995, the principals of Lone Star have organized private equity funds totaling approximately $24 billion of capital that has been invested globally through Lone Star's worldwide network of affiliate offices.
Logos, product and company names mentioned are the property of their respective owners.