Sotherly Hotels Inc. Enters Merger Agreement for Acquisition
Exciting Acquisition News for Sotherly Hotels Inc.
Sotherly Hotels Inc. (NASDAQ: SOHO) has made an impactful announcement regarding its future. The company has officially entered into a merger agreement with a joint venture led by Kemmons Wilson Hospitality Partners and Ascendant Capital Partners. This merger is designed to enhance Sotherly's portfolio and provide significant financial benefits to its shareholders.
Details of the Merger Agreement
The merger will see the joint venture, specifically KW Kingfisher LLC, acquiring all outstanding shares of Sotherly common stock at a valuation of $2.25 per share. This offer represents an impressive premium, amounting to 152.7% over the company’s closing share price just before the merger announcement, indicating a strong commitment from the joint venture to maximize shareholder value.
Board Approval
The board of directors at Sotherly has unanimously approved this agreement, following the recommendations of a specially appointed committee. This committee comprises independent directors who rigorously evaluated the proposal, ensuring that it aligns with the best interests of all shareholders.
Commentary from Leadership
Andrew Sims, Sotherly's Chairman, emphasized the transaction's significance, noting it offers stockholders a substantial premium while being the highest paid for a public real estate investment trust (REIT) in over five years. He stated, "This merger provides a compelling, immediate, and certain cash value to our investors."
Long-Term Vision
Moreover, David Folsom, Sotherly’s CEO, noted that this merger stands as a testament to the quality of the company's hotel portfolio developed over more than two decades. The merger is viewed as a pathway for sustained success for Sotherly’s hotels and the broader community of associates and guests involved.
Role of Joint Venture Partners
Webb Wilson from Kemmons Wilson Hospitality Partners highlighted the unique qualities of Sotherly’s hotel portfolio situated in strategic locations across the Southeast. With a robust history in hospitality investments, KWHP intends to leverage its expertise to further fortify Sotherly's standing in the market. Wilson stated, "We look forward to enhancing the value of these assets with our hands-on investment approach that has proven successful in the past."
Similarly, Alex Halpern of Ascendant Capital affirmed the partnership’s aim to bring operational expertise, promising innovative financial solutions that will support the ongoing operations of Sotherly’s assets across desirable southeastern markets.
Preferred Stock Considerations
As part of the merger negotiations, holders of Sotherly's various series of preferred stocks will have the opportunity to convert their shares into common stock, benefiting from the cash merger consideration if they opt to do so. It’s an exciting opportunity for valued shareholders to reap the rewards of this merger.
Outlook for Closure
The completion of the merger is projected for the first quarter of the following year, contingent upon securing stockholder approval and meeting other customary closing conditions. Andrew Sims, as a prominent stockholder, has pledged to vote in favor of this significant transaction.
Future Communications
In light of this merger announcement, Sotherly Hotels will forego holding a conference call typically scheduled to discuss quarterly earnings. Instead, the company will focus on filing a Form 8-K with the SEC to ensure that shareholders have access to all relevant details regarding the merger agreement.
Advisory Teams
Piper Sandler & Co. is acting as the exclusive financial advisor for Sotherly's special committee, with Frost Brown Todd LLP providing legal guidance. KWHP has engaged Bass, Berry & Sims PLC as their legal advisors, while Milbank LLP is facilitating debt counsel and Berkadia is responsible for financial advisory services related to the merger.
About Sotherly Hotels Inc.
Sotherly Hotels Inc. (NASDAQ: SOHO) is a reputable lodging REIT established originally to manage upscale hotel properties across prime mid-Atlantic and southern U.S. markets. With a portfolio that encompasses ten full-service hotels, the company maintains its commitment to quality and community.
About Kemmons Wilson Hospitality Partners
This investment management firm, founded by the Kemmons Wilson family, the pioneers behind Holiday Inn, remains dedicated to advancing hospitality excellence. KWHP emphasizes hands-on involvement in its investments to create exceptional real estate portfolios.
About Ascendant Capital Partners
Operating as a vertically integrated platform in real estate investment, Ascendant focuses on hospitality and residential sectors, holding extensive commitments and successfully managing a portfolio exceeding $1.5 billion. Their objective is to capitalize on strategic opportunities across the hospitality landscape.
Frequently Asked Questions
1. What prompted the merger announcement for Sotherly Hotels Inc.?
The merger aims to enhance shareholder value significantly and leverage the strategic strengths of the involved partners.
2. Who are the main players in the joint venture?
The joint venture is led by Kemmons Wilson Hospitality Partners and Ascendant Capital Partners, bringing expertise in hospitality management.
3. What premium will shareholders receive from the merger?
Shareholders will receive a premium of 152.7% based on the stock's last closing price prior to the announcement.
4. When is the expected closure date for the merger?
The merger is anticipated to close in the first quarter of the following year, pending approval and conditions being met.
5. How will this impact Sotherly's current operations?
The merger is expected to strengthen Sotherly's operational capabilities and provide resources for future growth and development.
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