LaSalle Alerts SEC to Stock Purchases by Suitor Pebblebrook

(Bloomberg) -- LaSalle Hotel Properties, the luxury hotel owner that agreed to be acquired by Blackstone Group LP in a $4.8 billion deal, told regulators it’s concerned that a rival bidder inappropriately acquired its shares.

The losing suitor, Pebblebrook Hotel Trust, “was provided with material nonpublic information” during the sale process “and we believe that Pebblebrook was in possession of such information during the time it was purchasing the company’s shares,” LaSalle said in correspondence with the U.S. Securities and Exchange Commission last week.

Pebblebrook, which had a 4.8 percent stake in LaSalle on March 6, acquired 4.75 million additional shares from June 6 to June 15 and bought almost 840,000 more last week, lifting its holding to about 9.8 percent, according to a regulatory filing Friday. Most of the latest purchases were made for $35 or more, a premium to Blackstone’s offer of $33.50 a share, a sign that investors are betting Pebblebrook could revise its bid yet again.

While LaSalle’s board, led by Chairman Stuart Scott, has deemed the Blackstone offer to be superior, the rejected bid values LaSalle at $36.05 based on Pebblebrook’s shares, which fell 1.1 percent to $39.19 at 10:04 a.m. in New York. LaSalle shares declined 0.3 percent to $34.71.

Some of the nonpublic information includes long-term financial projections for LaSalle’s fiscal years ending December 2018 through 2022, the hotel operator said in a June 18 filing. It also includes the firm’s corporate five-year plan, according to the SEC correspondence that was obtained by Bloomberg.

An SEC spokeswoman declined to comment, as did representatives for LaSalle and Pebblebrook.

Vote Showdown

Pebblebrook, led by Chairman Jon Bortz, said its offer “represents the greatest value-maximizing opportunity” for shareholders of both companies, according to a statement Monday in which it disclosed it had increased its stake to about 9 percent. The most recent trades showing the 9.8 percent stake were disclosed in a filing Friday.

Pebblebrook “has attempted to engage, and may continue to attempt to engage” in discussions concerning a potential merger with its larger rival, the spurned suitor said in the filing, adding that it intends to vote its shares against the Blackstone deal, which requires 66 percent approval to proceed. Another large LaSalle shareholder, HG Vora Capital Management LLC, which owns 9.1 percent, has publicly supported the Pebblebrook proposal.

Bortz founded LaSalle and Pebblebrook, which are both based in Bethesda, Maryland.

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