Tarsadia Capital, LLC together with its affiliates, associates and funds it manages (“Tarsadia”), today announced that leading proxy advisor Glass, Lewis & Co. (“Glass Lewis”) has issued an updated report to shareholders of Extended Stay America, Inc. (NASDAQ: STAY) (“STAY” or the “Company”) and continues to recommend that shareholders vote AGAINST the Company’s proposed sale to Blackstone Real Estate Partners and Starwood Capital Group (the “Sale”).
In its report, which evaluates the revised offer of $20.50 per share of STAY, Glass Lewis wrote:1
- “Our vote recommendations have not changed and we continue to recommend that shareholders vote AGAINST the proposed transaction.”
- “Ultimately, we continue to believe that the Company’s stand-alone prospects are sufficiently appealing to warrant rejecting the proposed transaction in the absence of a more attractive take-out valuation.”
- “[W]e do not believe the revised offer price of $20.50 per share is sufficient to warrant supporting the proposed transaction at this time. In our view, the price increase of $1.00 per share, or approximately 5.1%, does not go far enough to address outstanding concerns with the deal process, timing and valuation.”
- “In particular, while the revised offer price raises the implied one-day premium to 21.0% from 15.1% ... it still falls meaningfully below the median premium paid in a set of all-cash transactions involving U.S. public companies (28.1%), in each case, as derived in the premiums paid analyses presented by Goldman Sachs and disclosed in the proxy statement.
- “We note the revised offer price raises the implied enterprise value-to-2022E EBITDA multiple of the proposed transaction to 11.9x from 11.6x, which remains well below the low end of the range of lodging REIT trading multiples derived in Tarsadia’s comparable companies analysis (14.6x).”
Despite changing its recommendation to a fairly rare “cautionary” support for the transaction, proxy advisory firm Institutional Shareholder Services Inc. (“ISS”) also noted:
- “The $1.00 bump in price represents only a 5.1 percent increase over the original deal, and there are lingering concerns about the process. On that basis, certain shareholders may reasonably choose to reject the revised terms, especially in light of potential upside in the standalone scenario.”
Tarsadia continues to urge STAY shareholders to vote AGAINST the Sale on the GOLD card, in line with the recommendation of Glass Lewis. For more information, please visit: www.ABetterFutureForStay.com.
About Tarsadia Capital
Tarsadia Capital, LLC is the New York-based investment management company of a family office. Tarsadia Capital has a flexible and long-duration investment mandate that focuses on equities and commodities globally. Our investment process employs deep fundamental research on secular inflections to identify and build conviction around asymmetric risk/reward opportunities that will play out over multi-year time horizons.
Tarsadia Capital, LLC (“Tarsadia”), Ravi Bellur, Michael Ching, Vikram Patel, Ross H. Bierkan, Stephen P. Joyce and Michael A. Leven (collectively, the “Participants”) have filed with the Securities and Exchange Commission (the “SEC”) a definitive proxy statement and accompanying form of proxy as well as a supplement to the definitive proxy statement to be used in connection with the solicitation of proxies from the shareholders of the Company for the Special Meeting. All shareholders of the Company are advised to read the definitive proxy statement and other documents related to the solicitation of proxies by the Participants, as they contain important information, including additional information related to the Participants. The definitive proxy statement and an accompanying GOLD proxy card will be furnished to some or all of the Company’s shareholders and will be, along with other relevant documents, available at no charge on Tarsadia’s campaign website at: www.ABetterFutureForStay.com and the SEC website at http://www.sec.gov/.
Information about the Participants and a description of their direct or indirect interests by security holdings is contained in the definitive proxy statement filed by certain of the Participants with the SEC on May 7, 2021 and the supplement to the definitive proxy statement filed by the Participants with the SEC on May 25, 2021. Each of these documents are available free of charge on the SEC website.
This material does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein in any state to any person. In addition, the discussions and opinions in this letter and the material contained herein are for general information only, and are not intended to provide investment advice. All statements contained in this letter that are not clearly historical in nature or that necessarily depend on future events are “forward-looking statements,” which are not guarantees of future performance or results, and the words “anticipate,” “believe,” “expect,” “potential,” “could,” “opportunity,” “estimate,” and similar expressions are generally intended to identify forward-looking statements.
The projected results and statements contained in this letter and the material contained herein that are not historical facts are based on current expectations, speak only as of the date of this letter and involve risks that may cause the actual results to be materially different. Certain information included in this material is based on data obtained from sources considered to be reliable. No representation is made with respect to the accuracy or completeness of such data, and any analyses provided to assist the recipient of this material in evaluating the matters described herein may be based on subjective assessments and assumptions and may use one among alternative methodologies that produce different results. Accordingly, any analyses should also not be viewed as factual and also should not be relied upon as an accurate prediction of future results.
All figures are unaudited estimates and subject to revision without notice. Tarsadia Capital disclaims any obligation to update the information herein and reserves the right to change any of its opinions expressed herein at any time as it deems appropriate. Past performance is not indicative of future results. Tarsadia Capital has neither sought nor obtained the consent from any third party to use any statements or information contained herein that have been obtained or derived from statements made or published by such third parties. Except as otherwise expressly stated herein, any such statements or information should not be viewed as indicating the support of such third parties for the views expressed herein.
1 Permission to quote from the ISS and Glass Lewis reports was neither sought nor obtained. Emphasis added.