Equity Inns, RFS Cancel Merger Deal

Equity Inns Inc. and RFS Hotel Investors Inc., two Memphis, Tenn., real estate investment trusts that own hotels, canceled a merger deal proposed in April after shares of Equity Inns dropped 30%. Equity Inns had agreed to buy RFS for $990 million in stock and assumed debt, a move that would have given it more upscale properties. Equity Inns owns 107 hotels with more than 13,700 rooms in 36 states; RFS has 64 hotels with about 9,400 rooms in 24 states. Equity Inns had originally agreed to swap 1.5 shares for each RFS share and assume about $330 million in debt. But shares of Equity Inns had fallen to $10.69 on Friday from $15.38, reducing the value of the transaction to $729 million. The purchase was contingent on Equity Inns stock not falling below $14 for a certain amount of time. Equity Inns shares rose 94 cents to close at $11.63, and RFS shares fell 63 cents to close at $13.88, both on the NYSE.