By Lisa Kerner
Charlotte, N.C., April 24 - Highland Hospitality Corp. entered into a definitive agreement to be acquired by affiliates of JER Partners Acquisitions IV, LLC in an all-cash transaction valued at approximately $2 billion, including debt assumption of $260 million.
The agreement calls for JER to acquire all of Highland's outstanding common stock and operating partnership units for $19.50 each, according to a company news release.
Highland said the purchase price is a 15% premium over its three-month average closing share price. No future dividends will be paid on the common stock under the agreement.
JER plans to liquidate the surviving corporation in the merger, giving each holder of Highland's 7 7/8% series A cumulative redeemable preferred stock $25.00 per share in cash plus accrued dividends.
The transaction is expected to close in the third quarter of 2007.
Highland's board has unanimously approved the merger agreement and recommends its shareholders approve the deal at a special meeting on a date to be announced.
"The proposed merger reflects our commitment to deliver value to our shareholders," Highland president and chief executive officer James L. Francis said in the release.
"We have built a portfolio of high-quality hotels and resorts and believe that the price offered by JER fairly reflects the underlying value of these assets. JER is a well-respected firm with a strong track record in our industry. We look forward to working together to gain shareholder approval and consummate this merger."
Bear, Stearns & Co. Inc. and Merrill Lynch & Co. acted as financial advisers to Highland, and Hogan & Hartson LLP acted as its legal adviser. Wachovia Securities and Citi acted as financial advisers to JER, with acquisition financing being provided by Wachovia Bank. O'Melveny & Myers LLP and Allen & Overy LLP acted as JER's counsel.
Highland, a McLean, Va.-based self-advised lodging real estate investment trust, owns 27 hotel properties.
JER is the private equity investment arm of the J.E. Robert Co., Inc., a real estate investment management company.
| Acquirer: | JER Partners Acquisitions IV, LLC
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| Target: | Highland Hospitality Corp.
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| Transaction total: | $2 billion
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| Price per share: | $19.50
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| Announcement date: | April 24
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| Expected closing: | Third quarter of 2007
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| Stock price for target: | NYSE: HIH; $18.80 on April 23
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