| IRVING, Texas and WASHINGTON, May 10, 2001 - FelCor Lodging Trust Incorporated
(NYSE: FCH - news) and MeriStar Hospitality Corporation (NYSE: MHX - news)
announced today an agreement to merge. The $2.7 billion transaction will
result in a pro forma market capitalization of $6.3 billion for the combined
company and will bring the number of hotels owned by FelCor to 299, with
approximately 78,000 rooms. As a result of the combination, FelCor will
own more hotels and rooms than any other U.S. lodging real estate investment
trust (REIT). MeriStar shares were valued at a 9% premium based on MeriStar�s
average closing price for the past 20 trading days. After the merger
of MeriStar Hospitality and FelCor, MeriStar Hotels & Resorts (NYSE:
MMH - news) will continue to manage the newly added hotel assets.
Under the terms of the merger plan, which was approved by the boards
of both companies, holders of MeriStar shares (or common operating partnership
units) will receive $4.60 per share in cash and 0.784 shares (or units)
of FelCor, for a total value (based on the closing price of FelCor common
stock on May 9) of approximately $1.1 billion. FelCor also will either
assume or refinance $1.6 billion in MeriStar debt. The consideration paid
to MeriStar represents a cost per room of approximately $94,500, a 11.3%
net operating income capitalization rate and an EBITDA multiple of 8.0x
based on results as of March 31, 2001. The merger is expected to be accretive
to FelCor�s funds from operations (�FFO�) for pro forma 2001 and 2002.
FelCor�s dividend is presently expected to remain at its current annualized
level of $2.20 per share.
The merger will add diversity to FelCor�s portfolio with 113 additional
hotels and 28,897 rooms, and will enhance concentration in the upscale
and resort segments. FelCor will be the largest independent owner of Crowne
Plaza®, Doubletree®, Embassy Suites®, Hilton®, Holiday
Inn®, Radisson®, Sheraton®, and Westin® hotels.
| �We are very similar companies and have had very
similar strategies for value creation,� said Thomas J. Corcoran, Jr., President
and CEO of FelCor. �While we have both enjoyed some size-related efficiencies
over the years, I expect the combined company to enjoy better access to
capital, cost savings, improved diversity and brand distribution, and enhanced
buying power in dealings with third parties. Moreover, the scale and diversity
of the new FelCor portfolio is unmatched in the industry which, I believe,
will make it a benchmark for hotel real estate.�
�Combining MeriStar and FelCor solidifies the Company�s position as
a preeminent owner of institutional quality lodging assets, providing immediate
benefits to our MeriStar shareholders and creating a powerful platform
for
continued growth and value enhancement,� said Paul W. Whetsell, Chairman
and CEO of MeriStar Hospitality. �We have a great deal of confidence in
Tom Corcoran and his management team. This will give me the opportunity
to focus on the strategic activities of MeriStar Hotels & Resorts,
which will continue to operate 111 hotels for FelCor.�
Tom Corcoran will continue as President and CEO of FelCor. Paul W. Whetsell
and Stephen D. Jorns have |
|
MeriStar Hotels & Resorts Supports
Proposed Merger
WASHINGTON, D.C. - May 10, 2001-- MeriStar Hotels &
Resorts (NYSE: MMH), the nation�s largest independent hotel management
company, today announced that it supports the proposed merger between MeriStar
Hospitality Corporation and FelCor Lodging Trust.
MeriStar Hotels & Resorts operates 109 of the 113
hotels owned by MeriStar Hospitality. All management agreements between
MeriStar Hotels & Resorts and MeriStar Hospitality will remain intact
following the consummation of the proposed merger.
�We currently manage two hotels for FelCor and look forward
to expanding our owner/operator relationship with them,� said Paul Whetsell,
chairman and chief executive officer. �Additionally, this merger will allow
me to focus more on the strategic growth of MeriStar Hotels & Resorts.�
MeriStar Hotels & Resorts operates 268 hospitality
properties with more than 55,000 rooms in 36 states, the District of Columbia,
Canada, and Puerto Rico, including 54 properties managed by Flagstone Hospitality
Management, a subsidiary of MeriStar Hotels & Resorts. Through its
Doral Golf brand, MeriStar manages 11 golf courses. BridgeStreet Corporate
Housing Worldwide, a MeriStar subsidiary, is one of the world�s largest
corporate housing providers, offering upscale, fully furnished corporate
housing throughout the United States, Canada and Europe. |
|
agreed to join the FelCor Board of Directors. FelCor will continue to be
headquartered in Irving, Texas.
The equity portion of the transaction is structured to qualify as a
tax-free merger. The merger is subject to the approval of shareholders
of both companies and is expected to close in August 2001.
Deutsche Banc Alex.Brown and J.P. Morgan Securities Inc. served as financial
advisors to FelCor in connection with the transaction and Salomon Smith
Barney advised MeriStar.
Summary Fact Sheet
MeriStar
FelCor
Pro forma
Hospitality Lodging Trust
Combined (B)
Equity market capitalization (A) $1,093
$1,374
$2,229
Total market capitalization 2,731
3,493
6,291
Properties
113
186
299
Rooms
28,878 48,838
77,716
Number of states
28
35
39
Top 3 Brands
Hilton Embassy Suites
Embassy Suites
Radisson Holiday Inn
Holiday Inn
Sheraton Crowne Plaza
Crowne Plaza
Pro forma Debt /
EBITDA (TTM) ©
4.9x
3.8x
4.5x
EBITDA / Pro forma
interest (TTM) ©
2.9x
3.0x
2.7x
(A) Equity valued at transaction value.
(B) Combined financials reflect adjustments for the transaction.
(C) Trailing 12 months as of 3/31/01. |
Geographic Diversification
(2000 EBITDA by State)
FelCor MeriStar
Combined
California
20.7% 19.5%
20.2%
Florida
11.3% 21.5%
15.4%
Texas
18.5%
8.0% 14.2%
Georgia
7.7%
3.3% 5.9%
New Jersey
2.6%
9.1% 5.3%
Illinois
3.6%
4.6% 4.0%
Pennsylvania
3.5%
2.9% 3.3%
Louisiana
3.3%
2.0% 2.8%
Virginia
0.9%
4.6% 2.4%
Arizona
3.2%
1.2% 2.4%
Total Top 10 States
75.3% 76.6%
75.8% |
Brand Diversification
(2000 EBITDA Contribution by Brand)
FelCor MeriStar
Combined
Embassy Suites
40.9%
2.7% 25.4%
Holiday Inn
24.6%
8.8% 18.2%
Crowne Plaza
12.9%
4.9% 9.7%
Sheraton
7.7% 12.1%
9.5%
Hilton
0.5% 21.0%
8.8%
Doubletree
5.7%
3.7% 4.9%
Radisson
0.0%
9.9% 4.0%
Westin
1.3%
4.5% 2.6%
Courtyard by Marriott
1.0%
4.5% 2.5%
Marriott
0.0%
5.7% 2.3%
Wyndham
0.0%
4.3% 1.7%
Ramada
0.0%
3.1% 1.2%
Fairfield Inn
0.8%
0.0% 0.5%
Hampton Inn
0.8%
0.0% 0.5%
Other
3.7% 14.9%
8.3% |
About MeriStar Hospitality Corporation
Washington, D.C.-based MeriStar Hospitality Corporation owns 113 principally
upscale, full-service hotels in major markets and resort locations with
28,897 rooms in 27 states, the District of Columbia and Canada. The company
owns hotels under such internationally known brands as Hilton, Sheraton,
Marriott, Westin, Radisson and Doubletree.
About FelCor Lodging Trust Incorporated
FelCor�s hotel portfolio consists of 186 hotels with nearly 50,000
rooms and suites and is concentrated primarily in the upscale and full-service
segments. FelCor is the owner of the largest number of Embassy Suites,
Crowne Plaza, Holiday Inn and independently owned Doubletree-branded hotels.
Other leading hotel brands under which FelCor�s hotels are operated include
Sheraton Suites,
Sheraton and Westin. FelCor has a current market capitalization of
approximately $3.5 billion.
This press release shall not constitute an offer to sell or the solicitation
of an offer to buy any securities nor shall there be any sale of any securities
in any state or province in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under applicable securities
laws. FelCor plans to file a registration statement on Form S-4 with the
SEC in connection with the
merger transaction. The Form S-4 will contain a prospectus, a proxy
statement, and other documents for the stockholders� meetings of FelCor
and MeriStar at which time the proposed transaction will be considered.
FelCor and MeriStar plan to mail the proxy statement and prospectus contained
in the Form S-4 to their respective stockholders. |
