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While we were sleeping: Bass, Bristol merge

It happened quickly and quietly on the morning of Monday, Feb. 28. While most of us were sleeping, executives from Atlanta-based Bass Hotels & Resorts and Dallas-based Bristol Hotels & Resorts were putting together a merger agreement between the two companies. Some are viewing this merger as the third - but certainly not the last - powerhouse deal to occur in the hospitality industry in less than two years.

Persuant to the merger agreement, Bass will commence a cash tender offer for all outstanding shares of common Bristol stock. Following the offer, each share of Bristol common stock not acquired to the offer will be converted into the right to receive $9.50 in cash. The total purchase consideration for the Bristol shares is $157 million.

The merger creates new opportunities not only for Bristol's business strategy, but also its employees and stockholders. "The combination of Bristol's operations with one of the top global leaders in the hospitality industry will result in significant opportunities for growth and success that outweigh Bristol's position as a small player without access to a franchise brand of our own," says Jeff Mayer, CFO of Bristol Hotels & Resorts. "To our shareholders, the purchase price represents a significant premium to the company's stock price in recent months."

While executives at Bristol are opportunistic about the merger, Bass is hoping that the deal will further balance the company's position in North America. "The Bass economic model is to be a hotel company that is founded on management and ownership as well as to be a substantial franchisor," says Tom Arasi, president of Bass Hotels & Resorts, The Americas. "In other parts of the world, we're very balanced. In North America, because we have so much franchising activity, our overall economic model would be better to have a lot more management contracts.

"It was really a strategic situation that made a lot of sense to us," he continues.

According to Arasi, Bristol - which leases and/or manages 112 hotels - will become part of the Bass family. Of the hotels Bristol manages and leases, approximately 100 are operated under leases with FelCor Lodging Trust, a company that could also enjoy the fruits of the deal.

"I believe FelCor clearly believes [the merger] is a very beneficial part of its future," says Arasi. "[FelCor] will continue to be the owner of the properties, and it will experience the huge benefit of marrying a branding organization with a management organization. [FelCor] gets to have a more direct interface with us as a brand."

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