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Prime Hospitality Corp. (NYSE: PDQ) announced today that it had signed a definitive agreement to be acquired by affiliates of The Blackstone Group for $12.25 per share, a 42% premium to the closing price on August 18th.
The total value of the transaction, including debt, is over $790 million. Prime Hospitality Corp. (Prime) controls three hotel brands -- AmeriSuites, Wellesley Inns & Suites and Prime Hotels and Resorts -- operating and franchising 256 hotels with 33,605 rooms. Of these hotels, it owns 112 comprising 14,183 rooms.
The Board of Directors of Prime 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 fourth quarter of 2004.
Blackstone plans to maintain the headquarters operations of Prime Hospitality Corp. in Fairfield, NJ. In addition, Blackstone intends to convert 37 of the owned Wellesley Inns & Suites, which were originally built as moderate price extended stay hotels with kitchens, to one of its Extended Stay America brands.
In making the announcement, Attilio Petrocelli, Chairman and Chief Executive Officer of Prime, 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. The Board is especially grateful to the excellent team of associates in this organization."
Jonathan D. Gray, Senior Managing Director of The Blackstone Group, said, "We are excited to be acquiring Prime Hospitality. Prime has an outstanding collection of properties, brands and people. We look forward to working with the organization, its franchisees and owner/partners."
A special shareholder meeting will be announced soon to obtain shareholder approval.
In connection with the transaction, Prime will commence a tender offer and consent solicitation relating to its 8.375% Senior Subordinated Notes due 2012 ($178.7 million principal amount outstanding). Details with respect to this tender offer and consent solicitation will be set forth in tender offer documents, which will be furnished in due course to holders of the Notes.
The Company will host a conference call to discuss the transaction, which will be held on August 19, 2004 at 10:00 a.m. The dial-in number is (800) 818-6592.
Bear, Stearns & Co. Inc. is serving as financial advisor to Prime and Banc of America Securities LLC is serving as financial advisor for Blackstone. Bank of America's CMBS Capital Markets Group is providing acquisition financing for the transaction. Olshan Grundman Frome Rosenzweig & Wolosky LLP and Simpson Thacher & Bartlett LLP acted as legal advisers to Prime and Blackstone, respectively.
About Prime Hospitality Corp. - Prime Hospitality Corp., one of the nation's premiere lodging companies, owns, manages, develops and franchises more than 250 hotels throughout North America. The Company owns and operates three proprietary brands, AmeriSuites(R) (all suites), PRIME Hotels & Resorts(R) (full-service) and Wellesley Inns & Suites(R) (limited service). Also within Prime's portfolio are owned and/or managed hotels operated under franchise agreements with national hotel chains including Hilton, Sheraton, Hampton, and Holiday Inn.
About The Blackstone Group - The Blackstone Group, a private investment firm with offices in New York, London and Hamburg, was founded in 1985. Blackstone's Real Estate Group has raised five funds, representing over $6 billion in total equity, and has a long track record of investing in hotels and other commercial properties. In addition to Real Estate, The Blackstone Group's core businesses include, Private Equity, Corporate Debt Investing, Marketable Alternative Asset Management, Mergers and Acquisitions Advisory, and Restructuring and Reorganization Advisory.
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