Red Lion Gets $173M Purchase Proposal
- Jun 30, 2008
Red Lion Hotels Corp. has not been on the hunt for a buyer, but that has not stopped Columbia Pacific Opportunity Fund L.P. from making an offer. Columbia Pacific, a 12.7 percent shareowner in the Spokane, Wash.-headquartered hospitality company, has made a non-binding and conditional preliminary proposal to acquire Red Lion’s outstanding shares for a total of $173 million. Columbia Pacific submitted a letter dated June 27 to Red Lion’s Chairman of the Board with an offer of $9.50 per each of Red Lion’s outstanding shares, which, as of April 30, totaled 18,228,271; the figure constitutes a 35 percent premium over the June 27 closing price of $7.05. Columbia Pacific also filed a Schedule 13D with the Securities and Exchange Commission detailing its interest in acquiring the company. “Given the current hospitality market, Red Lion’s recent share prices and the equity markets in general, we don’t think it’s surprising that someone would take an interest in our stock, given what we think is its intrinsic value,” Anthony Dombrowik, Red Lion CFO, told CPN today.Red Lion owns, operates and franchises upscale and mid-scale hotels under the Red Lion Brand. As of the close of the first quarter, the company’s network of properties included 53 hotels totaling 9,266 rooms and 441,640 square feet of meeting space in nine states and one Canadian province. In response to Columbia Pacific’s proposal, Red Lion officials have noted that the Board of Directors will review the speculative offer, with a focus on the goal of maximizing shareholder value, in a timely fashion. “They asked for exclusivity in a 60-day due diligence period,” Dombrowik said. In the meantime, it will be business as usual at Red Lion. “We will continue with our strategic plans,” he added. “We’re not going to let this distract us from executing our plans.” Company stock opened today at $8.25.