Extended Stay America shareholder Tarsadia Capital on April 26 filed a preliminary proxy statement with the U.S. Securities and Exchange Commission detailing its arguments against the proposed $6 billion 50/50 joint buyout offer by Blackstone Real Estate Partners and Starwood Capital Group, announced by ESA on March 15.
The move came hours after ESA filed its definitive proxy statement in favor of the deal and set a special meeting for June 8 to vote on the proposed acquisition. Tarsadia initially sent a letter to shareholders on March 22 outlining its opposition to the offer. Shareholders now have been sent ESA management's white card to vote in favor of the deal and Tarsadia's gold card to vote against the deal.
Tarsadia holds approximately 3.9 percent of outstanding ESA shares, according to the investment firm.
In its filing, Tarsadia reiterated from its March 22 letter its two main objections to the deal: timing and price. It also argued that ESA's boards relied on a flawed fairness opinion, that the process has been inadequate, and that the boards failed to review all potential strategic alternatives, including ESA not interviewing Tarsadia's three proposed board members. In addition, Tarsadia argued that according to ESA's preliminary proxy statement, two of its own board members are against the proposed transaction.
ESA's justifications for the deal include a premium to shareholders of 51 percent compared with ESA's pre-pandemic price, that it provides "superior value" to the continued execution of ESA's strategic plan on a time and risk-adjusted basis, and the company's need for significant capital to maintain and renovate its aging properties.
ESA's preliminary proxy statement showed the company had been in and out of talks with Blackstone and Starwood since 2017.
RELATED: Extended Stay America Sets Voting Date for Acquisition Agreement