Strategic Hotels and Resorts Inc (NYSE:BEE) has recently entered into an agreement with Blackstone Real Estate Partners, which would allow the later to acquire all outstanding shares of the former, at a share price of $14.25. The deal has been valued at $6 billion and has been attracting significant attention from law agencies, on charges of breaching fiduciary duties.
The CEO of Strategic Hotels, Raymond L. Gellein, stated that the deal was targeted at maximizing share value. He further affirmed that the company board had considered several options, before going for the all cash payment offer from Blackstone. Strategic Hotels has an impressive portfolio of high quality hotels around the country and with the experience of Blackstone in the lodging industry the later believes that they can make progress despite the market being highly volatile. The reports from BEE also revealed that J.P. Morgan had been hired as financial advisor for the deal and the transaction is expected to be completed by 1Q2016. Furthermore, the final decision to sell would also rest on how the stockholders of the company vote on the matter.
Unfortunately, things do not seem to be going in favor of the deal, since the SEC has received a number of claims that the deal has been severely underpriced. As per the details of the litigations, BEE has a 52-week high of $14.48, while some analysts have set a price target of $17 for the stock. However, as per the conditions of the deal, shareholders would be receiving just $14.25 in cash for the stock. This translates to virtually no premium for the shareholders. Since the deal has not been executed as yet, the SEC is actively pursuing the investigation and is asking shareholders of BEE to come forward with any information related to the lawsuit.
Strategic Hotels and Resorts Inc (NYSE:BEE) suffered a loss of 0.36% to its share value, after trading 8.27 million shares during the September 16 session, to close at a share price of $13.99.
