Park Hotels & Resorts Inc. (NYSE:PK) entered into a definitive merger agreement to acquire Chesapeake Lodging Trust (NYSE:CHSP) for $2 billion on May 5, 2019. Under the terms of the deal, Park will acquire all the outstanding shares of Chesapeake in a cash and stock transaction. Under the terms of the merger agreement, Chesapeake shareholders will receive $11 in cash and 0.628 of a share of Park common stock for each Chesapeake share. Each of the outstanding Chesapeake common shares that is subject to a Chesapeake time-based share award or a Chesapeake performance share award shall automatically become one hundred percent vested and all restrictions and forfeiture conditions thereon shall lapse, contingent upon the consummation of the merger, and thereafter such Chesapeake common shares shall be considered outstanding for the payment of consideration. Upon closing, Park stockholders and Chesapeake shareholders will own approximately 84% and 16% of the combined company, respectively. Park common stock will continue to trade on the New York Stock Exchange following the merger under the symbol "PK."

Park has secured a $1.1 billion financing commitment from BofA Merrill Lynch, $700 million to finance the cash component of the merger consideration, $400 million to repay Chesapeake's unsecured term loan and two mortgages and pay for a portion of the transaction costs. As on August 28, 2019, Park Hotels & Resorts entered into a $950 million unsecured delayed draw term loan agreement with Bank of America, N.A. acting as the administrative agent, in order to finance the acquisition. The term facility consists of a $100 million two-year tranche and an $850 million five-year tranche. In case of termination of the transaction, Chesapeake will be required to pay the Park a termination fee of $62.5 million except that the termination fee will be $38.5 million with respect to any termination relating to a superior proposal that is communicated by the Board to Park prior to June 4, 2019. Park's Board of Directors will be increased to ten members upon closing, with two additions from Chesapeake's Board of Trustees. Thomas J. Baltimore, Jr., Park's Chairman and Chief Executive Officer, will continue to serve as Chairman of Park's Board of Directors and will also continue to lead the combined company, along with Park's existing senior management team. Park executives will maintain existing management positions. Eight current Park Directors, Thomas J. Baltimore, Jr., Patricia M. Bedient, Gordon M. Bethune, Geoffrey Garrett, Christie B. Kelly, Sen. Joseph I. Lieberman, Timothy J. Naughton and Stephen I. Sadove, will continuing as members of the Park Board, and Thomas A. Natelli and Thomas D. Eckert, current trustees on the Chesapeake Board will be joining Park Board.

The transaction is subject to customary closing conditions, including receipt of the approval of Chesapeake shareholders, regulatory approval, the receipt of tax opinions relating to REIT status of each of Chesapeake and two of its subsidiaries and of Park, the Form S-4 shall have become effective in accordance with the provisions of the Securities Act and the shares of Park common stock that constitute the common stock consideration shall have been approved for listing on the NYSE. Park stockholder approval not required. Park plans to sell five non-core hotels prior to the proposed closing, including both of Chesapeake's New York City hotels, in addition to three non-core Park hotels which are currently under contract. It is not a condition to the completion of the merger that any of these dispositions be completed. Chesapeake Lodging Trust's shareholders meeting is scheduled for September 10, 2019. If all other conditions to consummation of the merger have been satisfied or validly waived but the sale of properties has not been completed, the closing of the merger will be automatically extended to the earlier of (i) the date that is one business day after the date on which the sales have been completed and (ii) October 10, 2019. The transaction has been unanimously approved by the Board of Directors and Board of trustees of Park and Chesapeake, respectively. The Board of Chesapeake Lodging Trust recommends the shareholders to vote in favor of the transaction. As of September 10, 2019, the transaction was approved by the shareholders of Chesapeake. The companies currently expect the transaction to close in late third quarter or early fourth quarter of 2019. As on July 26, 2019, the deal is expected to close in the fourth quarter of 2019. As of September 4, 2019, the transaction is expected to close by mid-to-late September 2019. As of September 10, 2019, the transaction is expected to close on or about September 18, 2019. The transaction is accretive for stockholders and will be accretive to adjusted FFO per share in 2020 and beyond.

Merrill Lynch, Pierce, Fenner & Smith Incorporated and Barclays Capital Inc. acted as financial advisors and Paul D. Manca of Hogan Lovells US LLP acted as legal advisor to Park. J.P. Morgan Securities LLC acted as financial advisor and provided fairness opinion while Steven Williams, Eric Goodison, David Huntington; Peter Fisch, Lindsay Parks, Scott Sontag, Andrew Gaines, Claudine Meredith-Goujon, Andrew Forman, William O'Brien and Marta Kelly of Paul, Weiss, Rifkind, Wharton & Garrison LLP and Polsinelli PC acted as legal advisors to Chesapeake. Melissa Sawyer of Sullivan & Cromwell LLP represented J.P. Morgan Securities LLC. MacKenzie Partners, Inc. acted as proxy solicitor for Chesapeake and will receive a fee of $0.02 million for its services. Chesapeake has agreed to pay J.P. Morgan a fee of $14 million, of which $2.5 million became payable upon delivery by J.P. Morgan of its opinion and the remainder of which is payable upon the closing of the merger.

Park Hotels & Resorts Inc. (NYSE:PK) completed the acquisition of Chesapeake Lodging Trust (NYSE:CHSP) for approximately $2.5 billion on September 18, 2019. As a result of the acquisition, Chesapeake common shares will cease trading on the New York Stock Exchange effective as of September 18, 2019. In connection with the consummation of the merger, all members of the board of trustees of the Chesapeake Lodging Trust resigned as trustees of the trust. In addition, the mentioned Executive Officers ceased to hold the positions i.e. James L. Francis as President and Chief Executive Officer, Douglas W. Vicari as Executive Vice President and Chief Financial Officer, D. Rick Adams Executive as Vice President and Chief Operating Officer and Graham J. Wootten as Senior Vice President, Chief Accounting Officer and Secretary. At closing, Park drew on the $850 million five- year tranche from its previously announced unsecured delayed draw term loan agreement and terminated the commitment with respect to the $100 million two- year tranche.