Institutional Shareholder Services (ISS), a service which advises fund managers on shareholder votes, has advised the owners of Extended Stay America to vote against a $6 billion buyout by Starwood Capital and Blackstone.
The transaction, which was announced in mid-March, is now believed to undervalue the lodging company’s assets in light of the strong recovery in travel and leisure which is currently taking place. Leading up to this new guidance from ISS, shareholders had already begun pushing back on the transaction.
One high profile leader of the opposition is Tarsadia Capital, which argues that the EBITDA multiple at which Extended Stay agreed to sell itself was at a significant discount to the appropriate peers.
While it remains to be seen if the shareholder vote will go in the board’s favor and support the deal or attempt to stop it, ISS siding with the opposition is a major blow and could derail the transaction.