Blackstone Group LP doesn’t plan to raise its offer for LaSalle Hotel Properties, according to a person with knowledge of the matter, paving the way for the luxury-hotel company to complete a deal with competing suitor Pebblebrook Hotel Trust.

The latest version of Pebblebrook’s bid, from last week, may lead to a superior proposal to an agreement reached with Blackstone, a determination made unanimously by LaSalle’s board, the company said in a statement Monday.

LaSalle is now able to “engage in discussions with Pebblebrook in accordance with the terms of the Blackstone merger agreement,” the Bethesda, Maryland-based company said in the statement. “There can be no assurance that the discussions with Pebblebrook will result in the board’s determination that the Pebblebrook proposal is a superior proposal or the consummation of a transaction that is superior to the pending transaction with Blackstone.”

Blackstone will walk away with a $112 million breakup fee if LaSalle reaches an agreement with Pebblebrook. A Blackstone representative declined to comment.

LaSalle agreed in June to be acquired by Blackstone for $33.50 a share in cash, or roughly $3.7 billion, thwarting months of efforts by Pebblebrook to buy the luxury-hotel owner. Pebblebrook’s latest bid is to buy LaSalle for a mix of cash and stock, offering LaSalle investors 0.92 common share for each LaSalle share, with the option of receiving $37.80 a share in cash for as much as 30 percent of the deal.

Pebblebrook shares fell 5.1 percent to $36.88 at 10:14 a.m. in New York, while LaSalle shares fell 1.9 percent to $34.37. Pebblebrook’s implied price for LaSalle is $35.09 a share, based on Pebblebrook’s current trading and assuming a maximum cash portion for the deal.

Late last week, two prominent shareholder-advisory firms — Institutional Shareholder Services Inc. and Glass, Lewis & Co. — issued reports recommending that LaSalle shareholders oppose Blackstone’s all-cash offer, arguing that Pebblebrook’s bid is superior.

Pebblebrook, which owns 9.8 percent of LaSalle, said it will vote against Blackstone’s bid. HG Vora Capital Management LLC, which had 9.1 percent of LaSalle’s shares when the Blackstone offer was accepted, also has said that it plans to vote against the deal because it doesn’t maximize value for shareholders and that the Pebblebrook bid is superior. The Blackstone takeover would need approval from investors representing two-thirds of LaSalle’s shares.

“We are pleased with the decision” by LaSalle’s board, Pebblebrook Chief Executive Officer Jon E. Bortz said in a statement Monday. “We continue to believe our proposal is superior to the Blackstone agreement and we look forward to engaging with LaSalle’s board to quickly reach an agreement to merge our two companies and allow shareholders to maximize immediate and long-term value.”

Pebblebrook’s latest overture constitutes a superior offer for at least four business days, during which LaSalle would have been able to engage in good-faith negotiations with Blackstone, according to terms of the Blackstone agreement included in regulatory filings. LaSalle said Monday that a special meeting for shareholders to vote on the Blackstone deal remains scheduled for Sept. 6 in Washington.

Blackstone’s decision to not raise its bid for LaSalle as it ups the ante elsewhere. Last week, Blackstone bumped up its offer for Australia’s Investa Office Fund to A$5.45 per unit from A$5.25. It also came up with more money in 2007 to win a bidding war against Vornado Realty Trust for Equity Office Properties Trust.

©2018 Bloomberg L.P. This article was written by Scott Deveau and Gillian Tan from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to

Photo Credit: The Southernmost Beach Resort in Key West, pictured here in 2015, is one of a number of luxury hotels owned by LaSalle Hotel Properties. Jim Allen / Flickr