May 28 (Reuters) - A proxy adviser has recommended shareholders of hotel operator Extended Stay America Inc to vote against a joint $6 billion takeover offer by two private-equity firms, saying the current deal terms do not appear to be sufficiently compelling.
Blackstone Group Inc and Starwood Capital Group struck a deal in March to buy the company, which owns and operates 650 hotels in the United States.
The proposed deal, however, has faced opposition from a chorus of shareholders on valuation grounds.
“Given the potential upside from the sector-wide recovery and company-specific catalysts, the current deal terms do not appear to offer a sufficiently compelling value relative to the standalone scenario,” Institutional Shareholder Services (ISS) said in a statement.
The proxy adviser also said issues related to the timing of the deal and the sales process also seem to validate investor skepticism.
Earlier this week, three directors nominated to the Extended Stay’s board said the proposed deal undervalued the company, which is expected to benefit from an uptick in demand for lodging post-pandemic.
Reporting by Shreyasee Raj in Bengaluru; Editing by Anil D’Silva