|By Rick Alm, The Kansas City Star, Mo.|
Knight Ridder/Tribune Business News
Oct. 28, 2004 - John Q. Hammons Hotels Inc., which is considering a $63.5 million buyout offer, says a shareholder suit trying to block the proposed deal is "premature." Publicly traded Hammons, based in Springfield, said the shareholder class-action lawsuit filed earlier this week in Delaware seeks to block the deal, calling the $13-a-share price offered by Spanish Barcelo Crestline Corp. "inadequate." Hammons said it will vigorously contest the action.
"We are fully committed to ensuring that any transaction that occurs is the product of a fair process that maximizes value to the holders of the Class A common stock," said David Sullivan, who will head a committee of Hammons directors to examine the offer.
"The company has not reached any agreement with Barcelo Crestline with respect their proposal. We believe the lawsuit that has been brought against the company and its directors in reaction to the proposal received from Barcelo Crestline is premature, and we encourage shareholders to allow us the opportunity to respond to this proposal in an appropriate and thoughtful manner.
Barcelo officials said their proposed purchase price represents a 15 percent premium for Hammons' shares, which closed Friday at $11.31 and have averaged $9.86 during the last six months. Shares closed Wednesday at $13.22, up 16 cents, or 1.23 percent, in heavy trading on the American Stock Exchange. Shares reached a 52-week high of $13.30 during the day.
Founder John Q. Hammons and his affiliates own 76 percent of the combined equity in John Q. Hammons Hotels Inc. and John Q. Hammons Hotels LP, and 77 percent of the voting power in John Q. Hammons Hotels Inc., which owns 46 hotels in seven states and manages 14 others. The properties operate mainly under the Embassy Suites, Holiday Inn or Marriott flags.
Hammons would continue to operate his privately held portfolio of 27 lodging properties that operate or are under construction in 17 states.
Kansas City area Hammons properties include Homewood Suites and Embassy Suites near Kansas City International Airport.
Privately held Barcelo Crestline, with hotel interests in 16 countries on four continents, has been controlled for three generations by the Barcelo family, based in Palma de Mallorca.
Under terms of the proposed agreement, Hammons would participate in the new company, which would total an estimated 190 U.S. hotels in its ownership, lease and management portfolio. The new company would be called Barcelo Hammons Hotels and Resorts Inc.
The cash transaction is expected to close in January.
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