Blackstone buys La Quinta for $3.4bn

The Blackstone Group has tracked down another hotel deal, this time acquiring the Dallas-based La Quinta chain in a $3.4bn transaction.

The Blackstone Group agreed to acquire Dallas-based hotel operator La Quinta in a roughly $3.4 billion (€2.89 billion) deal. The purchase, at $11.25 a share, represents a premium of 37 percent over the company’s stock price at the close of yesterday’s trading session. The deal is expected to close in the first quarter of next year.

Blackstone adds La Quinta to its stable of hotel chains.

For Blackstone, the deal represents the firm’s continued pursuit of US hotel chains. In the past two years, the New York-based firm has also logged acquisitions of Wyndham International, Boca Resorts, Extended Stay America and Prime Hospitality Corp., with a combined value on all of these deals, including La Quinta, surpassing $11.75 billion.

La Quinta, which is headed by chairman and chief executive Francis Cash, owns and operates 357 hotels, and oversees 221 franchised locations. The hotels operate under the La Quinta Inns, Baymont Inn & Suites and Budgetel brands.

Blackstone is not the only party that views the public lodging space as undervalued. Carl Icahn recently snapped up a 9.3 percent stake in Fairmont Resort Hotels, and has proposed a possible sale as way to get fair value out of the stock.

In the Blackstone deal, Morgan Stanley acted as financial advisor to La Quinta, and Goodwin Procter provided legal advice. Blackstone tapped Bear Stearns, Deutsche Bank and Merrill Lynch as financial advisors, while Simpson Thacher & Bartlett served as legal counsel.

Blackstone declined to comment about this deal.

There was no word in the press release regarding how the firm will finance the transaction. The equity will likely come out of Blackstone’s most recent real estate fund Blackstone Real Estate Partners IV, a 2003-vintage $2 billion fund.