Hilton and WestCoast say final terms will be announced at closing, expected by year end. The companies said they decided to announce their agreement early because they will be "disclosing the proposed transaction in connection with pursuing potential franchises." Lehman Brothers Inc. is acting as financial advisor to WestCoast in this transaction.
Of the 42 Red Lion properties, eight are owned by Hilton and 11 are leased. One hotel is operated by Red Lion under a management agreement, and the remaining 22 are franchise agreements. Hilton acquired the Red Lion brand as part of its November 1999 acquisition of Promus Hotel Corp.
The five Doubletree hotels (all of which had been branded previously as Red Lions) are located in Pasco, Wash. (278 rooms); Portland/Columbia River, Ore. (301 rooms); Jantzen Beach, Ore. (320 rooms); Boise, Idaho (162 rooms); and Missoula, Mont. (171 rooms). Hilton owns the properties in Washington and Oregon, leases the hotel in Idaho and has a 50 percent equity position in the Montana property, the sale of which is subject to a joint venture agreement.
The acquisition will raise the number of rooms owned, leased, managed or franchised by WestCoast Hospitality Corp. from 8,600 rooms in 46 hotels in nine states to more than 16,000 rooms in 93 hotels in 15 states. The deal will expand WestCoast's presence into key new markets including San Diego and Sacramento, Calif.; Colorado Springs and Denver, Colo.; St. Paul, Minn.; Omaha, Neb.; Missoula, Mont.; and Springfield, Mo.
Stocks of hotel owners took a beating on Tuesday after an analyst downgraded three of the industry's top players on expectations they will slice or even obliterate fourth-quarter dividends as a result of slumping occupancy related to the terrorist attacks on Sept. 11. Hilton closed Thursday up four cents to $8.29. The price is down from a high of $13.57 in May and above its more recent 52-week low of $6.15 on Sept. 21. WestCoast's share price closed Thursday at $5.97, unchanged from Wednesday. The price is down from a 52-week high of $8 in July.
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