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Extended Stay (STAY) to be Acquired by Blackstone & Starwood
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Extended Stay America, Inc. recently reached an agreement to be acquired by a 50/50 joint venture comprising Blackstone and Starwood Capital Group. Following the news, shares of Extended Stay America surged 13.4% on Mar 15. Notably, shares of the company have gained 51.1% in the past six months, compared with the industry’s rally of 39.9%.
Per the agreement, Extended Stay shareholders will receive $19.50 per paired share, which is 15.1% over the closing stock price on Mar 12, 2021. The value of the deal is nearly $6 billion. The deal is expected to be completed in second-quarter 2021, subject to stakeholder’s approval.
Extended Stay is not likely to pay its regular quarterly dividend while the deal is in progress, except for the previously declared 9 cents distribution on Mar 26, 2021. Extended Stay operated nearly 650 hotels in the United States. The company manages properties of ESH Hospitality, which includes 564 hotels and approximately 62,500 rooms in the country.
The company is the largest integrated owner and operator of hotels in North America. It differs from traditional hoteliers by offering prolonged lodging services to self-sufficient guests. This provides Extended Stay a competitive advantage. The company derives industry-leading margins by leveraging this unique business model.
Ever since the coronavirus pandemic, this is the biggest deal in the hotel industry. The coronavirus crisis had affected the company’s operations during third-quarter 2020. Notably, travel restrictions, stay-at-home directives and changing consumer patterns in response to the pandemic negatively impacted the company. Consequently, during the third quarter, the company’s RevPAR and Adjusted EBITDA declined 16.0% and 27.9%, respectively, from the prior-year period. Meanwhile, the company stated that the pandemic is likely to persist and affect operations as well.
Tyler Henritze, head of US acquisitions for Blackstone Real Estate said, “Travel and leisure is one of Blackstone’s highest conviction investment themes, and we have confidence in the extended stay model. We helped create this company nearly twenty years ago, and believe our expertise puts us in a unique position to add long-term value.”
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Extended Stay (STAY) to be Acquired by Blackstone & Starwood
Extended Stay America, Inc. recently reached an agreement to be acquired by a 50/50 joint venture comprising Blackstone and Starwood Capital Group. Following the news, shares of Extended Stay America surged 13.4% on Mar 15. Notably, shares of the company have gained 51.1% in the past six months, compared with the industry’s rally of 39.9%.
Per the agreement, Extended Stay shareholders will receive $19.50 per paired share, which is 15.1% over the closing stock price on Mar 12, 2021. The value of the deal is nearly $6 billion. The deal is expected to be completed in second-quarter 2021, subject to stakeholder’s approval.
Extended Stay is not likely to pay its regular quarterly dividend while the deal is in progress, except for the previously declared 9 cents distribution on Mar 26, 2021. Extended Stay operated nearly 650 hotels in the United States. The company manages properties of ESH Hospitality, which includes 564 hotels and approximately 62,500 rooms in the country.
The company is the largest integrated owner and operator of hotels in North America. It differs from traditional hoteliers by offering prolonged lodging services to self-sufficient guests. This provides Extended Stay a competitive advantage. The company derives industry-leading margins by leveraging this unique business model.
Ever since the coronavirus pandemic, this is the biggest deal in the hotel industry. The coronavirus crisis had affected the company’s operations during third-quarter 2020. Notably, travel restrictions, stay-at-home directives and changing consumer patterns in response to the pandemic negatively impacted the company. Consequently, during the third quarter, the company’s RevPAR and Adjusted EBITDA declined 16.0% and 27.9%, respectively, from the prior-year period. Meanwhile, the company stated that the pandemic is likely to persist and affect operations as well.
Tyler Henritze, head of US acquisitions for Blackstone Real Estate said, “Travel and leisure is one of Blackstone’s highest conviction investment themes, and we have confidence in the extended stay model. We helped create this company nearly twenty years ago, and believe our expertise puts us in a unique position to add long-term value.”
Extended Stay, which shares space with Hyatt Hotels Corporation (H - Free Report) Hilton Worldwide Holdings Inc. (HLT - Free Report) and Marriott International, Inc. (MAR - Free Report) , carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>