Barcelo drops out of Hammons Hotels negotiations

John Q. Hammons Hotels Inc. announced Feb. 1 that its exclusive negotiating deal with Virginia-based Barceló Crestline Corp., with regard to a possible merger, has expired without an agreement between the two companies. Negotiations were ongoing since Dec. 29, after Barceló had offered $21 a share, about $103 million, to purchase all of Hammons Hotels’ Class-A common stock.

“The parties were not able to resolve the open issues during the agreed upon

exclusivity period,” said David Sullivan, Hammons Hotels’ special committee chairman, in a news release. “In light of Mr. Hammons’ desire not to extend his exclusivity with Barceló Crestline, it seemed appropriate for the company not to extend exclusivity as well.”

In October, privately held Barceló offered Hammons Hotels shareholders $13 a share, about $64 million, when the stock was trading at $11.31. Hammons Hotels’ special committee declined the offer Dec. 7, citing an “unacceptable price” and “a number of deficiencies.” The two companies had been working exclusively through January.

In a Barcelo news release, Simon Pedro Barceló, co-chairman and CEO of Barceló said, “We are disappointed that the special committee appointed by John Q. Hammons Hotels’ Board of Directors was unable to reach an agreement with us during this period of exclusivity. Barceló Crestline will not continue to pursue the merger.”

Upon this news, stock activity pushed Hammons Hotels’ (Amex: JQH) price up 15 percent Feb. 2 to an all-time high before closing at $23.31 a share. The stock is up approximately 106 percent since Barceló’s first offer in October.

Hammons Hotels Vice President Scott Tarwater said he couldn’t offer much comment on the specifics of the negotiations, or why the two companies couldn’t reach an agreement.

Tarwater did confirm, however, that another unsolicited proposal has been received by the committee and is under consideration. Sullivan added that the proposal, from another private company, “appears to have support from some of our current Class-A stockholders.”

JQH Acquisitions LLC, registered in Delaware, has made an offer of $24 per Class-A share, though Tarwater declined to comment on whether this was the same offer. He said that Hammons Hotels continues to solicit offers for the purchase of the company’s stock, adding that Hammons has been looking to sell the public stock for a while.

“He’s always been interested in going private, and if the next viable offer that comes along fulfills that opportunity, then he would be delighted,” Tarwater said. “If a reasonable offer comes along that makes sense for the stockholders and it remains public, then that will also be (considered), so it’s kind of an either or situation.”

Hammons Hotels went public in 1995. It began trading at $16 a share.

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