Texas, US-based Braemar Hotels & Resorts is in the midst of a shareholder tussle as activist investor Blackwells Capital seeks to gain representation on Braemar's board of directors.

The move, highlighted by a Nomination Notice on 10 March 2024, has been met with staunch opposition from Braemar, which has described the notice as invalid due to several shortcomings.

Invalid nomination notice and legal action

Braemar takes the view that the Nomination Notice from Blackwells lacks essential disclosures, notably the true intentions behind the proposed nominations. Braemar alleges that Blackwells' objective might include a covert attempt to take over the company without offering a fair price.

Its board unanimously deemed the Nomination Notice invalid due to these deficiencies.

Braemar has now escalated the situation by filing a complaint in the US District Court for the Northern District of Texas to prevent Blackwells from proceeding with its alleged illegal proxy contest.

Allegations of misrepresentation

Braemar has accused Blackwells of misrepresenting its interest in acquiring Braemar at a price significantly below its actual value.

Despite purportedly withdrawing its interest in acquiring the company, Braemar asserts that Blackwells submitted an investor presentation focused on taking Braemar private, using the proxy campaign as leverage to initiate acquisition discussions.

Braemar has pointed out a pattern of similar tactics used by Blackwells in the past with other companies, raising concerns about the investor's motives.

Braemar's focus on shareholder value

Despite the ongoing dispute, Braemar remains steadfast in its commitment to enhancing shareholder value.

The company has highlighted its robust financial performance, with its portfolio of resorts and urban hotels delivering impressive revenue per available room figures.

Braemar's strategy includes strengthening its balance sheet through successful refinancing and debt maturity extensions, ensuring stability and growth opportunities for its properties.

Braemar claims that its past performance in implementing strategies that increase value and its commitment to achieving positive outcomes across its investments show its determination to overcome the current challenges while giving priority to the interests of its shareholders.