Starwood Hotel & Resorts has received a $12.8 billion offer from a Chinese insurance company, higher than the $12.2 billion offer it has on the table from Marriott.
Chad Bray of the New York Times has the day’s news:
The competing offer, which was made on Thursday, came after Marriott Internationalagreed in November to acquire Starwood in a cash-and-stock deal worth about $10.8 billion, including debt. Several Chinese companies were among the rumored potential suitors at the time of Starwood, whose brands include Westin, W and Sheraton.
Marriott said on Monday that the competing consortium of bidders included Anbang Insurance Group, the Chinese owner of the Waldorf Astoria.
Anbang has reportedly agreed to acquire Strategic Hotels and Resorts fromThe Blackstone Group in a deal valued at $6.5 billion just months after Blackstone bought the company. Strategic Hotels owns the Four Seasons hotels and resorts in Silicon Valley, Washington and Jackson Hole, Wyo., the Fairmont and Intercontinental hotels in Chicago, and the JW Marriott Essex House Hotel in Manhattan.
Starwood said on Monday that its board of directors had not changed its recommendation in support of the Marriott deal, but that it would carefully consider the outcome of its discussions with the consortium led by Anbang to determine the course of action that is in the “best interest of Starwood and its stockholders.”
Claire Zilman of Fortune examines how the new offer may stop Marriott’s bid:
In a deal struck in November, Marriott was planning to buy Starwood for $72.08 per share. A simultaneous spinoff of Starwood’s timeshare business and subsequent merger with Interval Leisure Group was expected to result in another $7.8o per share in value. Starwood on Monday said the spin-off and merger would result in ILG common stock valued at $5.50 per Starwood share.
The combined company—to be led by Marriott president and CEO Arne Sorenson—would feature around 1.1 million rooms in 5,500 properties in more than 100 countries. Combined pro forma fee revenue is expected to top $2.7 billion.
Starwood’s board isn’t however, changing its recommendation that shareholders accept the Marriott offer.
“The board, in consultation with its legal and financial advisors, will carefully consider the outcome of its discussions with the Consortium in order to determine the course of action that is in the best interest of Starwood and its stockholders.”
Robert Terry of the Washington Business Journal notes that Starwood would have to pay $400 million to Marriott to terminate the deal:
Starwood said Monday its board of directors has not changed its recommendation in support of the merger with Marriott, a $12.2 billion deal that would create a hospitality behemoth with a market capitalization of more than $30 billion and represent the largest D.C.-area merger or acquisition since AvalonBay and Equity Residential’s $16 billion purchase of Archstone back in February 2013.
Anbang acquired Hilton Worldwide Holdings Inc.’s flagship hotel, the historicWaldorf Astoria in Manhattan, for $1.95 billion in October 2014.
Starwood would pay Marriott $400 million if it terminates the deal.
