Why FelCor Lodging Trust Incorporated Stock Is Surging Today

A hostile offer may put FelCor Lodging Trust in play for an acquisition.

Jordan Wathen
Jordan Wathen
Feb 21, 2017 at 11:20AM
Financials

What's happening?

Shares of FelCor Lodging Trust Incorporated (NYSE:FCH) are trading higher by about 10% as of 10:30 a.m. EST today after Ashford Hospitality Trust (NYSE:AHT) made a hostile offer to acquire the company.

So what

Under the proposed terms of the deal, FelCor shareholders would receive total consideration worth about $9.27 per Felcor share, based on Friday's closing price. For each Felcor share, investors would receive:

  • 1.192 shares of Ashford Hospitality Trust
  • 0.003 shares of Ashford Inc (NYSEMKT:AINC)
  • 0.001 warrants to purchase Ashford Inc stock at a strike price of $100 within 5 years of transaction close

Based on trading prices as of 10:30 a.m. EST on Tuesday, the offer valued FelCor stock at about $9.37 per share, even after ascribing no value to the out-of-the-money warrants. 

Word "REIT" in white on yellow background

Image source: Getty Images.


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Now what

Ashford Hospitality Trust is one of FelCor's largest shareholders, holding about 4.5% of its outstanding stock, but it will need the support of FelCor shareholders to proceed with its acquisition proposal. Ashford nominated seven candidates for election to FelCor's board of directors at the company's 2017 annual meeting of shareholders. Their election would all but force FelCor's to explore the opportunity of putting itself on the auction block.