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EXHIBIT 99.1
THE MEDITRUST COMPANIES [LA QUINTA LOGO]
Contacts:
THE MEDITRUST COMPANIES LA QUINTA INNS, INC.
INVESTORS: INVESTORS:
Elaine Quinlan William S. McCalmont
(781) 433-6000 (210) 302-6040
In New York until January 7
at (212) 371-5999
MEDIA:
Dan Katcher/Matt Sherman
Abernathy MacGregor Frank
(212) 371-5999
THE BOARDS OF DIRECTORS OF THE MEDITRUST COMPANIES
UNANIMOUSLY AGREE TO ACQUIRE LA QUINTA INNS FOR $3.0 BILLION
TRANSACTION EXPECTED TO BE 15% ACCRETIVE TO MEDITRUST FFO
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NEEDHAM, MA AND SAN ANTONIO, TX (JANUARY 4, 1998) -- The Meditrust
Companies ("Meditrust") (NYSE:MT) and La Quinta Inns, Inc. ("La Quinta")
(NYSE: LQI) announced today that they have signed a definitive agreement
providing for Meditrust Corporation to acquire La Quinta by means of a merger
of the two companies. The total consideration for the transaction will be
$26.00 per share, in a combination of newly issued shares in Meditrust and
cash, subject to certain adjustments. Meditrust will also assume approximately
$900 million in outstanding La Quinta debt. The total transaction is valued at
approximately $3.0 billion. Upon completion of the transaction, The Meditrust
Companies will have a total market capitalization of approximately $7.5 billion.
The transaction is expected to be approximately 15% accretive to
Meditrust's funds from operations ("FFO") per share for the first twelve months
of combined operations and is expected to contribute significantly to the growth
of the combined entity in future years. Meditrust intends to maintain its
historical record of quarterly increases in shareholder dividends. The
transaction will be accounted for as a purchase, and is expected to close in
the second quarter of 1998.
La Quinta is a fully integrated lodging company that focuses on the
ownership, operation and development of its two hotel products: (i) La Quinta
Inns, a chain positioned in the midprice segment without food and beverage
facilities, and (ii) La Quinta Inn & Suites, a new concept positioned at the
upper end of the midprice segment without food and beverage facilities. La
Quinta currently owns and operates 234 Inns and 36 Inn & Suites with a total of
approximately 35,000 rooms. La Quinta's hotels are located in 28 states with
strong market positions in numerous southern and western states.
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Abraham D. Gosman, chairman of the board of directors of The Meditrust
Companies, said, "Meditrust is off and running. The acquisition of La Quinta is
consistent with our stated strategy to make accretive acquisitions of growth
companies, in growth industries, with strong management teams, that can become
consolidators in their industries. We intend to capitalize on these
opportunities as they arise. This acquisition represents a platform for a
lodging and leisure sector within Meditrust."
Mr. Gosman continued, "La Quinta's growth plan is to have over 100 Inn &
Suites hotels with approximately 13,500 additional rooms to be opened by the
end of 1999. This program will increase the availability of total rooms by
approximately 45% and will result in Inn & Suites representing over 30% of
total La Quinta brand rooms by the end of 1999. With the successful completion
of La Quinta's comprehensive chain-wide re-imaging program and execution of its
Gold Medal(R) Rooms Program -- the complete renovation of over 30,000 La Quinta
Inn rooms -- La Quinta has achieved its goal of creating the most consistent,
high-quality lodging chain in the midprice segment of the industry. Over the
last three years, La Quinta management and employees have transformed the
company into one of the premier brands in its segment. La Quinta's employees
and management will play a critical role in the future of our combined company."
Gary L. Mead, president and chief executive officer of La Quinta Inns,
Inc., said, "This transaction allows La Quinta shareholders to convert their
shares into Meditrust shares on favorable terms and to participate in the
upside potential of the combined company. We feel that the strengths of the La
Quinta organization will add significantly to Meditrust's long-term growth
strategy. Additionally, the combined company will have greater financial
flexibility than La Quinta would have on a stand-alone basis. We are proud that
we are able to provide our shareholders with such a strong partner. Meditrust
has had strong financial performance -- an average annual total return of 22%
from inception through 1996 -- and 47 consecutive quarterly dividend increases."
Ezzat S. Coutry, chief operating officer of La Quinta, said, "La Quinta is
the largest owner and operator of midprice hotels without food and beverage
facilities -- a segment that is less sensitive to economic cycles than others
within the lodging industry. We have a proven portfolio of properties, a
well-recognized brand and the management expertise to create value for all
shareholders. La Quinta today has one of the highest customer satisfaction
ratings in the lodging industry. We also have a highly rated frequent travelers
program, the Returns(R) Club, with over 300,000 members, approximately 10% of
whom spend more than 30 nights a year at a La Quinta property. Combining
Meditrust's financial strength and ability to access the capital markets
coupled with La Quinta's operating and development experience will enhance La
Quinta's ability to create lasting brand value for the future."
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Abraham Gosman will continue to serve as chairman of the boards of
directors of The Meditrust Companies. Upon completion of the merger agreement,
Gary Mead, currently president and chief executive officer of La Quinta will
step aside to allow Ezzat Coutry, currently chief operating officer of La
Quinta, to become president and chief executive officer of La Quinta. Prior to
joining La Quinta in 1996, Mr. Coutry spent 20 years at Marriott International,
Inc. where he held various senior operations management positions overseeing
Marriott Hotels & Resorts, Courtyard, Residence Inn and Fairfield Inn brands.
The rest of the La Quinta senior officers also plan to stay with the new
organization.
Under the terms of the Merger Agreement, La Quinta will merge with and
into Meditrust Corporation. La Quinta shareholders will have the option to
elect to receive, subject to the amount of aggregate cash payable being limited
to approximately 25% of the total transaction consideration, either: (i) a
combination of Meditrust stock and the special dividend distribution of
earnings and profit referred to below, or (ii) cash. The stock consideration
will be payable in Meditrust paired shares under an exchange ratio determined
based on the average closing price of Meditrust's paired shares for 20 randomly
determined trading days in a 30-day period ending the seventh day prior to La
Quinta's shareholder meeting called to consider the merger, defined as the
"Meeting Date Price." The Merger Agreement provides that La Quinta shareholders
electing to receive cash will receive, subject to the maximum cash limitations,
$26.00 per exchanged La Quinta share.
The Merger Agreement also provides that La Quinta shareholders electing to
receive stock consideration will receive $26.00 in value so long as the Meeting
Date Price is between $34.20 and $41.80. The $26.00 in value will be comprised
of: (i) paired shares and (ii) a special dividend distribution of La Quinta's
earnings and profit. The special dividend distribution is expected to be
declared immediately prior to the merger, payable to all Meditrust shareholders
of record on a date to be determined by Meditrust between the 15th and the 45th
day following the merger and payable within 15 days of such record date. Above
and below the $34.20 and $41.80 Meditrust share values, the value received by
La Quinta shareholders electing to receive stock consideration is subject to
adjustment based on certain cap and collar mechanisms as described in the
Merger Agreement. If the Meeting Date Price is below $30.40, La Quinta will
have the right to terminate the Merger Agreement under certain circumstances,
subject to a top-up right exercisable by Meditrust. If the Meeting Date Price
is below $28.50, La Quinta will have the unilateral right to terminate the
Merger Agreement. On January 2, 1998, the closing price of Meditrust's paired
shares was $36.375.
All La Quinta shareholders will have the right to elect cash consideration
for each of their shares. In the event that cash to be paid both pursuant to
cash elections in the merger and in the post-closing dividend distribution
exceeds approximately 25% of the total transaction consideration, the cash
merger consideration will be distributed pro rata among those shares submitted
for cash and all other La Quinta shares will receive paired shares and the
post-closing dividend distribution.
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The transaction is anticipated to be tax-free to La Quinta shareholders who
receive only Meditrust paired shares, except to the extent of: (i) the value of
the paired operating company of the paired shares, which is estimated at
approximately 5% of the total value of the paired shares, and (ii) the special
dividend distribution referred to above. Further, La Quinta shareholders who
receive cash in the transaction (including the associated earnings and profit
distribution) will be taxable to the extent of such cash, with the cash received
as merger consideration generally treated as capital gains and the earnings and
profit distribution treated as ordinary income.
The transaction is conditioned, among other things, upon approval of a
majority of Meditrust Corporation's and Meditrust Operating Company's
outstanding shares, two-thirds of La Quinta's outstanding shares, and regulatory
agencies. In the event that the merger agreement is terminated, under certain
circumstances, including in order to allow La Quinta to pursue a superior
proposal (as defined in the Merger Agreement), La Quinta will be required to pay
Meditrust a break-up fee of $75 million.
In a separate agreement, Gary Mead, Thomas M. Taylor & Co. and entities
and individuals associated with certain members of the Bass family who own in
the aggregate approximately 28% of La Quinta's shares have agreed, among other
things, to vote their La Quinta shares in favor of the proposed transaction with
Meditrust.
The Merger Agreement has been unanimously approved by the boards of
directors of Meditrust Corporation, Meditrust Operating Company and La Quinta.
Salomon Smith Barney acted as financial advisor and provided a fairness opinion
to The Meditrust Companies. Merrill Lynch & Co. Incorporated acted as
financial advisor and provided a fairness opinion to La Quinta.
La Quinta Inns, Inc. is the largest owner/operator of midpriced hotels in
the United States, with 234 La Quinta Inns and 36 La Quinta Inns & Suites with a
total of approximately 35,000 rooms. La Quinta Inns operate primarily in the
midprice segment without food and beverage facilities and La Quinta Inns &
Suites is a new concept positioned at the upper end of that segment. The Company
has inns located in 28 states, concentrated in the southern and western states.
The Meditrust Companies, a paired share real estate investment trust and
the nation's largest health care real estate investment trust, with
headquarters in Needham, Massachusetts, consists of Meditrust Corporation and
Meditrust Operating Company. Meditrust has investments in over 500 health care
facilities in 41 states with 38 different operators and has a total market
capitalization in excess of $4.5 billion.
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Certain matters discussed within this press release may constitute
forward-looking statements within the meaning of the federal securities laws.
Although Meditrust and La Quinta believe the statements are based on reasonable
assumptions, the companies can give no assurance that their expectations will
be attained. Actual results and the timing of certain events could differ
materially from those projected in or contemplated by the forward-looking
statements due to a number of factors, including, without limitation, general
economic and real estate conditions, the availability of equity and debt
financing for acquisitions and renovations, interest rates, competition for
hotel services in a given market and other risks detailed from time to time in
the filings of Meditrust Corporation, Meditrust Operating Company, and La
Quinta with the Securities and Exchange Commission, including quarterly reports
on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K.