Marriott International’s $210 million acquisition of Gaylord Entertainment’s brand and management contracts apparently isn’t pleasing everyone, especially one of its stockholders. On July 17, 2012, TRT Holdings, a Gaylord shareholder, issued an open letter to other Gaylord stockholders saying the recently announced proposed transaction is not in the best long-term interests of the Gaylord or stockholders. The letter also states that TRT intends to vote its shares of Gaylord’s common stock against such proposed transaction and urges its fellow stockholders to do the same.

In response, Gaylord issued a statement saying it continues to believe that the sale of rights to manage its hotels to Marriott International and the company’s subsequent conversion to a real estate investment trust (REIT) are in the best interest of its stockholders. Gaylord also noted that the proposed transaction was unanimously approved by its board of directors, including the two Gaylord board members designated by TRT, one of whom is the former chief financial officer of TRT and the other a chief executive officer of a large hotel management company.

“We were surprised by TRT’s letter given TRT’s involvement in every stage of the process, including participating in the bidding process for the management contracts and exploring an offer to acquire Gaylord Entertainment,” said Colin Reed, chairman and chief executive officer of Gaylord. “We believe TRT’s actions represent an attempt to derail a process that is in the best interests of all of our stockholders. We look forward to our stockholders having the opportunity to formally consider the proposed transaction at our upcoming stockholder meeting.”

Gaylord said it engaged in an extended process to consider alternatives to increase long-term value for its stockholders. Among those alternatives was the transaction with Marriott (which solicited interest in acquiring management contracts from four hotel operators, including TRT) as well as indications of interest to acquire the entire company. Gaylord said TRT had the opportunity to participate in each leg of that process and ultimately failed to present a proposal with respect to either one, despite being granted every conceivable due diligence information request and extended periods of time to develop any proposal.

Gaylord said the proposed transaction is the result of multiple rounds of bidding with the hotel operators that expressed interest in acquiring rights to manage Gaylord’s hotels, and intensive negotiations over all of the terms of the management contracts.

Arne Sorenson, CEO of Marriott, said the deal with Gaylord is fair to both parties, delivers real value to both, and in Marriott’s view, represent the lengths to which it is willing to go to obtain the rights to manage Gaylord’s group of assets.

Gaylord also said TRT’s “open letter” contains a number of significant inaccuracies and omissions relating to the Marriott agreement, as well as gross mischaracterizations of the proposed transaction and alternatives. It said it will respond to each item in detail at a later date. However, it believes it is important to address a few of the more egregious comments.

For example, Gaylord said TRT incorrectly states that the Marriott agreement would prohibit Gaylord from selling its hotels without Marriott’s consent, or to any buyer that owns 10 or more full-service hotels. Gaylord said no such restrictions will apply. With very limited exceptions (for a sale to felons, suspected terrorists or direct brand competitors of Gaylord-Marriott) Gaylord is free to sell the hotels to any buyers, without Marriott's consent.

Gaylord also said TRT incorrectly states that Marriott may simply assign the Gaylord management agreements to a third party without ensuring that the Gaylord hotels continue to receive the benefits of the Marriott trademarks and system. That is also false. Essentially, Marriott cannot sell or transfer the management rights to the Gaylord Hotels unless it sells the entire Marriott system to a third party.

Gaylord also said TRT grossly underestimates the benefits of management by Marriott, including access to Marriott’s world-class programs and services, economies of scale not otherwise available to Gaylord, and Marriott’s long track record of success in the large group meetings segment.

Gaylord reiterated that it has retained the contractual right to consider alternative proposals to acquire the company that are presented prior to the stockholders’ meeting to consider the proposed transaction. Gaylord and its board of directors said they remain open and willing to consider an offer for the entire company that produces the best value for stockholders.