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03/2004

EXTENDED STAY AMERICA acquired by BLACKSTONE

UNITED STATES Hospitality & Leisure / Hospitality / Hotels & Accommodation EV $1–10bn

Context

Affiliates of Blackstone Real Estate Partners IV and Blackstone Capital Partners IV signed a definitive agreement on March 5, 2004, to acquire Extended Stay America from its public shareholders through a take-private transaction. Under the terms of the merger agreement, shareholders of the lodging chain received $19.625 in cash per common share. The agreed consideration represented a 24% premium over the closing share price on the day of the announcement and a 204% appreciation relative to the initial public offering price from December 1995. The board of directors of Extended Stay America unanimously approved the transaction, which was scheduled for completion in the second quarter of 2004, subject to shareholder vote and customary closing conditions. The buyer planned to maintain corporate headquarters in Spartanburg, South Carolina. Operational management of the portfolio was assigned to Homestead Studio Suites, an existing holding of Blackstone that owned and operated 132 lodging properties. The transaction did not involve any re-branding of the operational units, which continued under existing banners including Extended Stay America, StudioPLUS, and Crossland Economy Studios. At the time of the agreement, Extended Stay America owned and operated 475 extended-stay properties across 42 states. Chief executive officer George D. Johnson, Jr. headed executive management at signing. Bear Stearns and Bank of America provided debt financing for the leveraged buyout. Morgan Stanley acted as financial adviser to Extended Stay America, with Shearman & Sterling acting as legal counsel. Bear Stearns advised Blackstone on financial matters, and Simpson Thacher & Bartlett provided legal counsel to the acquiring sponsor.

EXTENDED STAY AMERICA, which reported an EBITDA margin of [members only] in 2003, is valued in this transaction at an EV/EBITDA multiple of 10x–18x, representing a level close to the average currently observed in the Retail & Consumer sector (11.8x).

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Target

Extended Stay America owns and operates extended-stay hotels across the United States, with properties designed for guests who stay for weeks rather than a single night. The company was founded in January 1995 and is headquartered in Spartanburg, South Carolina, where its head office operations are based. Its hotels are located across a broad set of states and accommodate guests in suites equipped for longer occupancy. Rooms are sold through the company's own website, a call center and a loyalty program, and the offer targets business travelers, relocating professionals and other guests needing extended accommodation. Alongside its owned portfolio, the company franchises a portion of its hotels to third-party operators.

Ent. Value

$1–10bn

Equity Value

[members only]

Multiples

EV / Revenue

4x–10x

EV / EBITDA

10x–18x

EV / EBIT

[members only]

Historical Financials (USD)

Year
Rev
EBITDA
EBIT
2003
$450–900M
$250–500M
[members only]
2002
$450–900M
$250–500M
[members only]

Other operations with EXTENDED STAY AMERICA

Other operations with EXTENDED STAY AMERICA

List of similar M&A transactions (Date, Acquirer, Target, Country, Sub-sector)
DateAcquirerTargetCountrySector
03/2021BLACKSTONE / STARWOOD CAPITAL GROUPEXTENDED STAY AMERICAUNITED STATESHotels & Accommodation
06/2007LIGHTSTONE GROUPEXTENDED STAY AMERICAUNITED STATESHotels & Accommodation

REFERENCES

Valuation range: EV $1–10bn

Revenue range: $450–900M

EBITDA range: $250–500M

EV/Revenue range: 4x - 10x

EV/EBITDA range: 10x - 18x

Note: This page provides detailed data on a private equity M&A transaction. Detailed and exact financial metrics for the acquisition of EXTENDED STAY AMERICA by BLACKSTONE are reserved for mynth community members. Register for free to unlock full data.

Authors: This transaction was contributed by a verified mynth contributor and cross-checked against available transaction documents and official company communications.

Press release: view release

Target: extended stay america

Acquirer: blackstone