Legacy Hotels Agrees To Be Acquired By The Caisse De Dépôt Et Placement Du Québec, Westmont And Innvest Reit
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Legacy Hotels Agrees To Be Acquired By The Caisse De Dépôt Et Placement Du Québec, Westmont And Innvest Reit
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Category: Worldwide
This is a press release selected by our editorial committee and published online for free on 2007-07-13
Legacy Hotels Real Estate Investment Trust (“Legacy” or the
“Trust”) (TSX: LGY.UN), Cadbridge Investors LP (a limited partnership formed by Cadim, a
division of the Caisse de dépôt et placement du Québec, and Westmont Hospitality Group,
“Cadbridge”) and InnVest Real Estate Investment Trust (“InnVest”) (TSX: INN.UN) today
announced that they have entered into a support agreement (the “Support Agreement”) pursuant
to which LGY Acquisition LP (a limited partnership formed by Cadbridge and InnVest, the
“Offeror”) has agreed to offer $12.60 in cash per unit (the “Offer”) to acquire all of Legacy’s
outstanding units (including units issued upon the exchange of outstanding exchangeable shares
or the exercise of options prior to completion of the Offer). The all-cash transaction is valued at
approximately $2.5 billion, including debt.
The purchase price under the Offer represents a 20% premium over Legacy’s 30-day average
trading price on the Toronto Stock Exchange (the “TSX”) on February 28, 2007, the last trading
day prior to Legacy announcing the formation of its Special Committee to explore strategic
alternatives.
Following a thorough review of the Trust’s strategic alternatives, and recommendation of the
Special Committee, Legacy’s Board of Trustees has unanimously approved the transaction and
unanimously recommends that the Trust’s unitholders tender their units to the Offer. Fairmont
Hotels & Resorts Inc., Legacy’s largest unitholder representing 20.4% of the outstanding voting
rights, has entered into a lockup agreement with the Offeror to tender its entire ownership
interest in Legacy to the Offer.
Under the terms of a post acquisition reorganization, Legacy’s portfolio of assets will generally
be allocated with Cadbridge owning the large Fairmont managed hotels and InnVest owning
primarily Delta hotels.
“The proposed transaction reflects our commitment to deliver value to our unitholders,” stated
Neil J. Labatte, Legacy’s President and Chief Executive Officer. “Over the ten years since our
formation, we have assembled an unmatched portfolio of luxury and first-class hotels. We
believe the price offered by the Offeror fairly reflects the underlying value of these assets.
Cadim, Westmont and InnVest are well-respected investors with a strong track record in the
lodging industry.”
Fernand Perreault, Executive Vice-President, Real Estate of Caisse de dépôt et placement du Québec
added, “This acquisition provides us with an important ownership platform in this industry,combining talented people, well-known brands and an irreplaceable collection of hotel real
estate. We look forward to working with management and the hotels.”
Kenneth Gibson, President and Chief Executive Officer of InnVest, commented, “Legacy’s
portfolio consists of a diversified collection of well-branded hotel assets. We are thrilled to have
the opportunity to purchase these quality assets and establishing InnVest as the largest hotel
REIT in Canada.”
The Support Agreement allows Legacy to pay its regular quarterly distribution for the quarter
ended June 30, 2007, as previously announced on June 20, 2007, and for Legacy to continue to
pay its quarterly distribution, prorated through the closing of the transaction.
The Trust may terminate the Support Agreement under certain circumstances upon payment to
the Offeror of a break-up fee of $46 million.
A take-over bid circular, containing the terms and timing of the Offer, will be mailed to
unitholders in the next few weeks, together with a Trustees’ Circular that will provide further
details concerning Legacy's strategic alternative review process. Once mailed, the take-over bid
circular and the Trustees’ Circular will be available on the Canadian Securities Administrators’
System for Electronic Document Analysis and Retrieval (“SEDAR”) website at www.sedar.com.
The Offer will be subject to customary conditions, including the tender to the Offer of a
sufficient number of units that will result in the Offeror owning at least 66⅔% of the outstanding
units, obtaining required regulatory approvals and the absence of a material adverse effect. If a
sufficient number of units to meet the minimum tender condition are tendered to the Offer, the
Offeror has agreed to use all commercially reasonable efforts to acquire the remaining units
through a subsequent acquisition transaction or compulsory acquisition.
Morgan Stanley and RBC Capital Markets acted as financial advisors to Legacy. Avington acted
as financial advisor to Cadbridge and InnVest. Legacy’s Board of Trustees has received an
opinion from each of Morgan Stanley, RBC Capital Markets and BMO Capital Markets that the
consideration under the Offer is fair from a financial point of view to the unitholders of Legacy.
This news release contains forward-looking information related to, but not limited to, Legacy
operations, anticipated financial performance, business prospects and strategies. Forwardlooking
information typically contains statements with words such as “anticipate”, “believe”,
“expect”, “plan” or similar words suggesting future outcomes. Such forward-looking statements
are subject to risks, uncertainties and other factors, which could cause actual results to differ
materially from future results expressed, projected or implied by such forward-looking
statements. Such factors include, but are not limited to economic, competitive and lodging
industry conditions. Please refer to Legacy’s Annual Information Form, dated March 27, 2007,
which can be found on the SEDAR website at www.sedar.com, for a list of the risks inherent in
the activities of the Trust. All statements in this news release are qualified by such cautionary
statements. These statements are made as of the date of this news release and except as required
by applicable law, Legacy disclaims any intention or obligation to update or revise any such
forward-looking statements, whether as a result of new information, future events or otherwise.
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