April 2 (Reuters) - Hedge fund HG Vora Capital Management LLC on Monday urged LaSalle Hotel Properties Inc to negotiate with fellow U.S. hotel owner Pebblebrook Hotel Trust for a better offer after taking about 7.1 percent stake in LaSalle.
Pebblebrook had last week disclosed that it had offered to buy LaSalle in an all-stock deal that valued the company at more than $3 billion. The offer was rejected by LaSalle's board.
In a letter to LaSalle's management, founder of the hedge fund, Parag Vora, said Pebblebrook's initial offer was "inadequate", but presents a "compelling" opportunity for a more efficient cost of capital and stronger cash flows.
Vora urged LaSalle, owner of Park Central San Francisco and Westin Michigan Avenue, to form an independent strategic committee to negotiate with Pebblebrook and gauge interest from other potential buyers.
"We believe a sale of the entire Company would maximize value for shareholders," Vora said, after his hedge fund became the third biggest shareholder in LaSalle. (bit.ly/2H52bxs)
Reporting by Ankit Ajmera in Bengaluru; Editing by Arun Koyyur