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Park Hotels & Resorts announced its intent to acquire all outstanding shares of Chesapeake Lodging Trust in a transaction totaling $2.7 billion. Upon completion, the combined company will be the second-largest hotel real estate investment trust with a value at $12 billion.

Under the terms, Chesapeake shareholders will receive $11 in cash and 0.628 of a share of Park common stock for each Chesapeake share. The fixed exchange ratio represents an agreed upon price of $31 per share of Chesapeake shares of beneficial interest based on Park’s trailing 10-day volume weighted average price as of May 3. Based on Park’s closing stock price on May 3, this represents $31.71 per share of aggregate value to Chesapeake shareholders and represents a premium of approximately 11% to Chesapeake’s trailing 10-day VWAP and approximately 8% to Chesapeake’s closing stock price on May 3. 

Upon closing, Park stockholders and Chesapeake shareholders will own approximately 84% and 16% of the combined company, respectively. The deal is subject to customary closing conditions. The transaction has been approved by the board of directors and board of trustees of Park and Chesapeake, respectively. The companies expect the transaction to close in late third quarter or early fourth quarter of 2019.

Photo: Hotel Adagio San Francisco, Autograph Collection; Courtesy of Chesapeake Lodging Trust
 

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