ISS recommends against LaSalle deal with Blackstone

Shareholder advisory firm ISS on Friday recommended against a buyout deal of LaSalle Hotel Properties by private equity company Blackstone, in another boon for LaSalle`s unwelcome suitor Pebblebrook Hotel Trust.

ISS`s recommendation to LaSalle shareholders follows that of another shareholder advisory firm, Glass Lewis & Co, on Thursday.

Blackstone`s $3.7 billion all-cash offer is facing uncertainty as Pebblebrook on Tuesday stepped up its overtures with a higher offer to LaSalle’s board of trustees two weeks ahead of the final shareholder vote.

ISS said Blackstone`s all-cash bid was less than the current value of Pebblebrook`s competing bid, and less than the current value of LaSalle shares.

"While the adage “cash is king” has many axiomatic applications, it is less relevant as reasoning to forego investments that add up as being superior on a risk/reward basis," the ISS report said.

LaSalle and Blackstone declined to comment.

Pebblebrook Chief Executive Jon E. Bortz said the company was pleased with the ISS and Glass Lewis recommendations that LaSalle shareholders vote against the proposed deal with Blackstone.

LaSalle, which has interests in hotels including the Park Central San Francisco and Westin Michigan Avenue in Chicago, has so far resisted Pebblebrook`s proposal on the basis that the mix of stock and cash in its offer is riskier for shareholders than the outright cash deal offered by Blackstone.

A two-thirds majority is needed for the deal approval by shareholders. Pebblebrook has accrued a 9.8 percent stake in LaSalle, making it the fourth-largest shareholder behind hedge fund HG Vora Capital Management, which has also backed the Pebblebrook bid.

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