Benzinga | Mar 22, 2021 09:08AM EDT

Tarsadia Capital Believes Proposed Acquisition Of Extended Stay America By Blackstone And Starwood Severely Undervalues STAY And Is Opportunistically Timed

Tarsadia Capital, LLC, together with certain of its affiliates and the funds it manages ("Tarsadia" or "we"), is one of the largest shareholders of Extended Stay America, Inc. (NYSE:STAY) ("ESA" or the "Company"), beneficially owning an aggregate of approximately 3.9% of ESA's outstanding shares. Tarsadia and various of its affiliates have been investors in the hospitality and lodging industry for over four decades.

Tarsadia believes the Company's proposed sale to Blackstone Real Estate Partners ("Blackstone") and Starwood Capital Group ("Starwood") is not in the best interests of ESA shareholders for two primary reasons: first, because it undervalues the Company and, second, because it comes just as ESA and the entire lodging industry emerges from the COVID-19 pandemic to embark on a significant, multi-year recovery in RevPAR and earnings. Tarsadia will not vote in favor of the transaction.

Before the proposed sale was announced, Tarsadia nominated three, independent, world-class hospitality executives to the ESA Board of Directors to help ensure the Company was pursuing the right strategic path.

Today, Tarsadia sent a letter to its fellow ESA shareholders in which it demonstrates that the proposed transaction -- in which public shareholders would receive only $19.50 per paired share -- is an opportunistically timed purchase by private equity buyers at a valuation that is far below the Company's intrinsic value. Tarsadia believes that a sale of the Company now would deprive public shareholders of participation in the recovery of the lodging sector and imminent asset sales worth hundreds of millions of dollars.