Extended Stay director nominees say Blackstone deal undervalues company

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“We believe we can help the Company create value for shareholders that is well in excess of $19.50 per share,” said the directors, who were nominated to the board by Tarsadia Capital LLC, before the company announced plans in March to sell itself to Blackstone Group (NYSE:BX) and Starwood Capital Group for $6 billion.

Ross Bierkan, Stephen Joyce and Michael Leven, who have lodging industry experience, were speaking out for the first time and joining a chorus of investors opposed to this sale, citing the price.

They said they were acting independently of Tarsadia, the family office that owns 3.9% of Extended Stay and nominated them to the board, and of each other, in a letter seen by Reuters.

“We believe a standalone Extended Stay has a significant opportunity to create value for shareholders, if the Company pursues the right strategy and executes it well,” they wrote.

Extended Stay Chief Executive Bruce Haase disagreed, saying shareholders recognize the “dangerous potential outcomes and immediate value destruction” from opposing the sale, which was at the “right price” at the “right time.”

The trio said the company is expected to benefit from an upswing in travel and demand for lodging after the pandemic.

They cited value in the company’s real estate and said new unit growth could be accelerated through better collaboration with developers and franchisees. They left open the door to a sale.

Capital expenditure needs would be manageable and opportunities would include “both asset sales or a sale of the whole Company,” the letter said.

Leven was president of Las Vegas Sands (NYSE:LVS), Joyce was CEO of Choice hotels where he oversaw the franchise system, and Bierkan was CEO of RLJ Lodging (NYSE:RLJ) Trust.

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