Blackstone agreed to buy Strategic Hotels & Resorts Inc. for about $3.93bn (€3.5bn), expanding its lodging holdings to include luxury properties such as Manhattan's Essex House and the Ritz-Carlton in Half Moon Bay, California.
Blackstone offered $14.25 a share in cash for Strategic, about 13pc more than the share price before the chance of a takeover was reported. Chicago-based real estate investment trust. The firm also will buy the outstanding units of a subsidiary, Strategic Hotels Funding, not held by the company, according to a statement.
Blackstone, the world's largest private-equity firm, is wagering on increasing demand for luxury hotels. In May, Blackstone bought three high-end resorts -- the JW Marriott and the Ritz-Carlton in Orlando, Florida, and the JW Marriott Phoenix Desert Ridge in Arizona -- for about $1.25bn from a group led by Paulson & Co. The New York-based firm is also the biggest shareholder in hotel companies Hilton Worldwide Holdings. and LaQuinta Holdings.
The Strategic deal "reinforces the fact that Blackstone has a lot of capital to put to work," Michael Kim, an analyst who covers the firm at Sandler O'Neill & Partners LP in New York, said in a telephone interview. "They're certainly still finding opportunities to deploy that capital."
Strategic owns 18 high-end properties in urban centers and resort areas, including the Four Seasons in Jackson Hole, Wyoming, and the Fairmont in Scottsdale, Arizona. The REIT had hired bankers to explore a sale and attracted suitors including Bill Gates's Cascade Investment, which increased its stake last month to 9.8pc.
"The board thoroughly considered various alternatives over the course of the past few years, and this all-cash offer from Blackstone creates significant stockholder value with a high degree of execution certainty," Strategic chief executive Raymond "Rip" Gellein said in the statement.