The Blackstone Group LP, which has recently been taking bites out of the hotel and resort space in states along the East Coast, sank its teeth into another such deal, this time in the Sunshine State. Late last month, the New York-based private equity firm agreed to acquire publicly-owned, Boca Raton, Fla.-based, Boca Resorts Inc., in a transaction valued at approximately $1.25 billion.
The buyout shop will pay $24 per share, putting an approximated $966 million value on the resort company. The remainder of the deal includes Blackstone’s assumption of the company’s existing debt. The agreed upon price represents a 25% premium to the closing value of the shares on October 20-the day the deal was announced-and a $28% premium on the shares’ $18.76 closing price the day before.
According to a report published by Raymond James & Associates Inc., the purchase price represents an 11.7x multiple of the researcher’s estimated $99.4 million EBITDA estimate for the 2005 calendar year. If this is the case, than the transaction falls in line with the 11x to 12x EBITDA multiples that the public hotel sector is currently trading at, and is a little higher than the expected 10x to 11x EBITDA multiples that industry assets are expected to trade at in the coming year, according to a JMP Securities report.
Representatives of the Blackstone Group declined to comment for this article, stating that the deal information was too sensitive to disclose at this time.
In a statement, Blackstone Group Senior Managing Director, Jonathan Gray said, “We look forward to continuing the company’s tradition of re-investing in its properties, as we did during our previous ownership of the Savoy Hotel Group in London,” which Blackstone and Colony Capital acquired in 1998 for GBP520 million and sold in April of this year to Dublin-based property investment firm The Quinlan Group for GBP750 million.
The transaction, which is still subject to shareholder approval and other customary conditions, is expected to close in late 2004 or early 2005. The annual meeting of the company’s shareholders, scheduled for November 4, has been postponed pending the outcome of the shareholder vote to be held at a special meeting. No snags are expected, as Wayne Huizenga, the company’s chairman and CEO, who holds 98.5% of Boca Resorts’ vote, has already agreed to stock his shares in favor of the deal.
Boca Resorts owns and operates five Florida-based resorts with hotels, conference facilities, golf courses, spas, marinas and private clubs, including the Registry Resort at Pelican Bay and the Edgewater Beach Hotel, both located in Naples; the Hyatt Regency Pier 66 Hotel and Marina and the Radisson Bahia Mar Resort and Yachting Center, both in Fort Lauderdale; and the Boca Raton Resort & Club in Boca Raton.
Earlier this year, Blackstone made two similar acquisitions of hotel and resort chains. On March 5, the firm took the 475-hotel chain Extended Stay America Inc. private for $3.1 billion, or $19.63 per share plus company debt and deal charges. And on August 18, the firm struck a deal with Fairfield, N.J.-based Prime Hospitality Corp. to take private its franchise of 256 hotels for $790 million, or $12.25 per share.