in Transaction Valued at Approximately $2.6 billion
|BETHESDA, Md., February 21, 2006 — MeriStar Hospitality Corporation
(NYSE: MHX), one of the nation’s largest hotel real estate investment trusts
(REIT), today announced that it has signed a merger agreement to be acquired
by an affiliate of The Blackstone Group in a transaction valued at approximately
$2.6 billion. In the mergers contemplated by the merger agreement,
each share of MeriStar common stock and each unit of limited partnership
interest in MeriStar Hospitality Operating Partnership, L.P., MeriStar’s
operating partnership, will be converted into the right to receive $10.45
in cash. The $10.45 per-share consideration represents a 20 percent
premium over MeriStar’s closing stock price on November 10, 2005, the date
prior to published reports regarding a potential acquisition of MeriStar.
The board of directors of MeriStar has unanimously approved the merger agreement and has recommended the approval of the transactions by MeriStar’s stockholders. Stockholders will be asked to vote on the proposed transactions at a special meeting that will be held on a date to be announced. The mergers are expected to close in the second quarter of 2006, pending stockholder approval and other customary closing conditions. Completion of the mergers is not subject to receipt of financing by Blackstone.
“We are pleased to have entered into this agreement and believe that the transaction represents attractive value to our shareholders” said Paul Whetsell, MeriStar’s chairman and CEO.
Jonathan D. Gray, senior managing director of The Blackstone Group, said “We are excited to acquire the company. We look forward to working with MeriStar’s franchisors, managers and partners.”
MeriStar remains on track to close its previously announced sale of nine hotels and one golf and tennis club to affiliates of The Blackstone Group during the first quarter 2006.
Bear, Stearns & Co. Inc. and Morgan Stanley acted as financial advisors to Blackstone. Acquisition financing is being provided by Bear Stearns, Bank of America and Merrill Lynch. Lehman Brothers Inc. acted as financial advisor to MeriStar. Simpson Thacher & Bartlett LLP acted as legal advisor to Blackstone. Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisor to MeriStar. Miles & Stockbridge P.C. acted as Maryland counsel to Blackstone, and Venable LLP acted as Maryland counsel to MeriStar.
About MeriStar Hospitality Corporation
About The Blackstone Group
Safe Harbor Statement
Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to: economic conditions generally and the real estate market specifically; supply and demand for hotel rooms in our current and proposed market areas; other factors that may influence the travel industry, including health, safety and economic factors; competition; the level of proceeds from asset sales; cash flow generally, including the availability of capital generally, cash available for capital expenditures, and our ability to refinance debt; the effects of threats of terrorism and increased security precautions on travel patterns and demand for hotels; the threatened or actual outbreak of hostilities and international political instability; governmental actions, including new laws and regulations and particularly changes to laws governing the taxation of real estate investment trusts; weather conditions generally and natural disasters; rising insurance premiums; rising interest rates; and changes in U.S. generally accepted accounting principles, policies and guidelines applicable to real estate investment trusts. These risks and uncertainties should be considered in evaluating any forward-looking statements contained in this press release or incorporated by reference herein. All forward-looking statements speak only as of the date of this press release or, in the case of any document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are qualified by the cautionary statements in this section. We undertake no obligation to update or publicly release any revisions to forward-looking statements to reflect events, circumstances or changes in expectations after the date of this press release.
This communication is being made in respect of the proposed merger transaction involving MeriStar and affiliates of Blackstone. In connection with the transaction, MeriStar will file a proxy statement with the SEC. Shareholders are urged to read the proxy statement carefully and in its entirety when it becomes available because it will contain important information about the proposed transaction.
The final proxy statement will be mailed to MeriStar shareholders. In addition, the proxy statement and other documents will be available free of charge at the SEC’s Internet Web site, www.sec.gov. When available, the proxy statement and other pertinent documents also may be obtained for free at MeriStar’s Web site, www.meristar.com, or by contacting Kevin Welch, Senior Vice President and Treasurer, MeriStar Hospitality, telephone (301) 581-5926.
MeriStar and its directors and officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect to the proposed transactions. Information regarding MeriStar’s directors and executive officers is detailed in its proxy statements and annual reports on Form 10-K, previously filed with the SEC, and the proxy statement relating to the proposed transactions, when it becomes available.
Kevin J. Welch
|Also See:||MeriStar, Which Owns 58 Hotels, Reports Net Loss of $241.6 million in Fiscal 2005; Forecasts Net Income of $7 million to $11 million for 2006 / February 2006|
|Affiliate of The Blackstone Group Acquiring 9 Hotels and Golf Club from MeriStar for Approximately $367 / February 2006|