Strategic Hotels and Resorts Inc (NYSE:BEE) is being investigated by a range of law firms, such as Dunman & Dunman, Faruqi & Faruqi, LLP and others for a possible fiduciary duties breach in related to its deal with Blackstone Real Estate Partners VIII L.P.  According to the investigators, the deal only promises $14.25 per share to its shareholder, which is lower than the targeted price of analysts at $15.19.

Reason for investigation

The law firms believe that the board of Strategic Hotels and Resorts Inc has failed to fulfil its duty regarding safeguarding investors’ interests in the buyout deal. The deal is allegedly undervalued, which is attracting investigations from the securities law firms. While some of the analysts had valued the company’s share at $15.19 in the recent past, others had calculated the amount to be as much as its 52-week highest value, $17.00 per share. Lack of offering fair sales and deliberately undervaluing the transaction in order to detriment the shareholders, has come under the probing lens of the law firms.

A class action lawsuit has been, or shall be filed soon by various firms in this regard, demanding justification, compensation and transparency in the process.

Background of the deal

The company, on 8 September 2015, signed a definitive accord with Blackstone Real Estate Partners VIII L.P for the buyout in a transaction worth $6 billion. The company had announced that the deal would maximize the stakeholder value and also capitalize on its portfolio. The deal was signed for a value of $14.25 per share cash and also surrendering the membership units of Strategic Hotels and Resorts Inc subsidiaries. The remaining debt of the company was also sold along with the transaction.

Regarding the stakeholders’ interest, the Strategic Hotels and Resorts Inc (NYSE:BEE) said that the board had made all possible situations to offer alternatives. Also, the company said, it made all efforts to ensure highest value to the stakeholders with execution certainty at its best.