Interstate Hotels & Resorts (IHR.N) said it agreed to be bought by Hotel Acquisition Company LLC in an all-cash deal valued at $307 million, sending its shares up as much as 76 percent.
Hotel Acquisition Co, a joint venture between subsidiaries of Thayer Hotel Investors and Shanghai Jin Jiang International Hotels Co Ltd (2006.HK), will pay $2.25 a share, a 79 percent premium over Interstate's Thursday close.
Shares of the company surged to their highest at $2.22 since re-listing on the New York Stock Exchange in July.
Interstate's sale is the first hotel company that will be sold during this downturn, which could be an early positive sign for transaction activity going forward in hotels, and perhaps real estate broadly, Robert W. Baird & Co analyst David Loeb said in a note to clients.
The hotel industry remains in deep recession, and we believe this transaction offers the highest and best value to our shareholders, Interstate Chief Executive Thomas Hewitt said.
The deal has been approved by Interstate's lenders subject to certain pay downs at closing on its senior credit facility and is not contingent upon obtaining any additional financing, the Arlington, Virginia-based company said in a statement.
Shares of Interstate were up 75 percent at $2.20 in morning trade, making the stock the highest percentage gainer on the New York Stock Exchange. About 1.5 million shares changed hands, more than 100 times their 50-day moving average volume.
(Reporting by Abhishek Takle in Bangalore; Editing by Aradhana Aravindan and Unnikrishnan Nair)