Ashford Hospitality Prime Inc (NYSE:AHP) Receives Buyout Offer from Weisman Group

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Ashford Hospitality Prime Inc (NYSE:AHP) shares jumped 29.95% to $14.71 on Wednesday as the company received an unsolicited acquisition offer from Weisman Group, which made its intention public through an amended 13D SEC filing. Currently the Weisman Group and related parties own 5.42% of Ashford Hospitality Prime outstanding stock.

Ashford Hospitality Prime is a real-estate investment trust company that invests in high revenue per available room, luxury, upper-upscale and upscale hotels in gateway and resort locations.  It conducts its business and owns all of its assets through its operating partnership and operates in the direct hotel investment segment of the hotel lodging industry. The company currently owns interest in over 15 hotels across six states with over 3,590 total rooms.

The company has a market cap of $420.44 million with 28.46 million shares outstanding. The Weisman Group proposed to buy all of Asford Hospitality Prime’s assets for $1.48 billion, bringing the per share price to approximately $20.25. The stock has been trading in a 52-week range of $8.37 to $17.34.

Shares had actually jumped around 33% after the news broke out but wound up returning its intraday gains as analysts speculated that this deal is unlikely to push through. The Weisman Group is prepared to shell out around $70 million to buy out any existing contracts with Ashford Hospitality Prime and its advisor, but this amount might not be enough to convince the company’s managers to sell out. Advisory fees have amounted to close to $18 million last year for a subsidiary that manages the REIT.

The company has noted that it will review the offer, although it’s also worth noting that this comes two months after the board ruled out a sale from other interested parties. At that time, Ashford Hospitality Prime said that the offers provided no indications that independent directors believed would provide adequate value to shareholders.

 

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