Just when it looked like Marriott International’s planned acquisition of Starwood Hotels & Resorts was sailing along toward completion – with board votes at both companies just weeks away and a recent green light from U.S. antitrust regulators – a new Starwood suitor has suddenly emerged with a higher bid.
The unsolicited bid for Starwood comes from an investor group led by Anbang Insurance Group, a Chinese company that made headlines last year when it bought the Waldorf-Astoria in New York for almost $2 billion. The Beijing-based company has also reportedly made a deal to buy Strategic Hotels & Resorts from the Blackstone Group for $6.5 billion. Strategic owns 16 U.S. luxury properties, including some Four Seasons and Ritz-Carlton resorts as well as the JW Marriott Essex House in New York and the Hotel del Coronado in San Diego.
Other investors participating in the Anbang-led bid include a private equity firm called J.C. Flowers & Co. and a Chinese investment company called Primavera Capital Group, according to Bloomberg News. The news comes as more Chinese investors are are dumping investments in the Chinese economy and moving money to safer markets like the U.S.
The new bidders are offering $76 per share in cash for all Starwood stock, according to Starwood. Bloomberg said that puts a $12.9 billion value on the bid; Starwood estimated the current value of Marriott’s bid at $63.74 a share, based on Starwood’s recent stock price. The Marriott bid includes $2 a share in cash and the rest in Marriott stock. Another factor that Starwood’s board will have to weigh is that its agreement with Marriott provides for Starwood to pay Marriott a $400 million termination fee if the deal falls through.
Starwood said its board of directors will consider the new offer from the Anbang-led group in order to “determine the course of action that is in the best interest of Starwood and its stockholders.” The Starwood board also said that at this point, it “has not changed its recommendation in support of Starwood’s merger with Marriott.” Starwood and Marriott have entered into a definitive merger agreement, but Marriott has given Starwood a waiver effective through March 17 to look into the Anbang-led bid. Both Marriott and Starwood stockholders are expected to vote on the merger proposal on March 28.
Marriott said on Monday it is “confident that the previously announced merger agreement is the best course for both companies.”
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