FelCor Lodging Buying MeriStar Hospitality

Hotel investor FelCor Lodging Trust Inc. is buying hotel management concern MeriStar Hospitality Corp. for about $1.1 billion in cash and stock in a deal that would create one of the biggest hotel companies. FelCor is the largest owner of Embassy Suites, Crowne Plaza, Doubletree and Holiday Inn hotels; and MeriStar is a big owner of Hilton and Sheraton hotels. The deal would create a company with 299 properties and combined revenue of $2.9 billion.

FelCor, a real estate investment trust based in the Dallas area, owns 186 hotels. MeriStar Hospitality, based in Washington, has 113 hotels in 27 states and the District of Columbia. MeriStar officials valued the transaction at about $22 a share in stock and cash.

MeriStar Hospitality stockholders would exchange each share for 0.784 share of FelCor, or stock currently valued at $17.37 a share, plus $4.60 a share in cash. On the New York Stock Exchange, shares of MeriStar fell 15 cents to $21.30 and FelCor fell 30 cents to $21.80.