Blackstone Group to Acquire Extended Stay America

Extended Stay America, Inc. announced today that it had signed a definitive agreement to be acquired by affiliates of The Blackstone Group for $19.625 per share. The price represents a premium of 24% over the closing price of $15.81 today and an increase of 204% for shareholders since the initial public offering on December 15, 1995. The total value of the transaction, including debt, is over $3.1 billion. ESA currently operates 475 extended-stay hotels in 42 states and has been the fastest growing owned and operated hotel company since its founding in January 1995.The Board of Directors of Extended Stay America (ESA) unanimously approved the agreement in a special meeting today. The transaction is subject to shareholder approval and other customary conditions and is expected to be completed during the second quarter 2004.
ÊÊÊÊAffiliates of Blackstone Real Estate Partners IV and Blackstone Capital Partners IV are the acquiring entities.
ÊÊÊÊBlackstone plans to maintain the headquarters operations of Extended Stay America in Spartanburg, SC. Homestead Studio Suites, another Blackstone holding which currently owns and operates 132 extended stay hotels, will oversee management of the Extended Stay America hotel portfolio. There are currently no plans to re-brand the Extended Stay America properties.
ÊÊÊÊIn making the announcement, George D. Johnson, Jr., Chief Executive Officer of ESA, commented, “The Board of Directors is pleased with the terms of this acquisition and believes it is in the best interests of the Company’s shareholders. Blackstone has a proven record of accomplishment in the extended stay segment.” He added, “The Board is especially grateful to the excellent team of leaders and employees who have built this company from scratch into such a formidable hotel operation.”
ÊÊÊÊStephen A. Schwarzman, President and CEO of The Blackstone Group, said, “We are excited to be acquiring Extended Stay America. This transaction will benefit from our long track record and existing expertise in the hotel sector. That expertise, combined with the seasoned ESA team, augurs well for the future of the company.”
ÊÊÊÊA special shareholder meeting will be announced soon to obtain shareholder approval.
ÊÊÊÊThe Company will host a live teleconference/webcast at 10:00 a.m. Eastern Standard Time (EST) on Monday, March 8, 2004. The webcast can be accessed via the Company’s website at www.extendedstay.com in the Investor Information section.
ÊÊÊÊMorgan Stanley & Co. Incorporated is serving as financial advisor to ESA and Bear Stearns & Co. Inc. is serving as financial advisor for Blackstone. Bear Stearns and Bank of America are providing acquisition financing for the transaction. Shearman & Sterling LLP and Simpson Thacher & Bartlett LLP acted as legal advisers to ESA and Blackstone, respectively.
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