Unless Marriott International can come up with a much better offer, its deal to acquire and merge with Starwood Hotels & Resorts is off.
Earlier this week, just as the Marriott-Starwood deal was sailing toward completion, an uninvited consortium of bidders led by Chinese insurance giant Anbang stepped in with a new offer for Starwood. At the time, both Starwood and Marriott expressed confidence that their merger would likely go through as planned. But now Starwood has changed its mind.
Starwood said its board of directors, after closely examining the offer from Anbang and its co-bidders – an offer which has been increased rom $76 to $78 in cash per share – has decided that the Anbang consortium’s offer is “superior,” so it “intends to terminate the Marriott merger agreement” and enter into one with the Anbang group. The board found that Marriott’s offer, which is mostly in the form of Marriott stock, is only worth $71 a share.
Marriott’s only hope of salvaging the merger is to come up with an offer better than the Anbang group’s bid by midnight March 28.
“Starwood will negotiate in good faith with Marriott during this period, and the Starwood board will consider in good faith any changes to the Marriott agreement that Marriott may propose during this period,” Starwood said.
In view of these new developments, Starwood has canceled a special stockholders’ meeting which had been scheduled for March 28 to vote on the Marriott bid. And here’s one odd note in Starwood’s announcement: It said that in spite of the superior offer from Anbang and company, “Starwood’s Board has not changed its recommendation in support of Starwood’s merger with Marriott.”
After Starwood’s announcement, Marriott said it “continues to believe that a combination of Marriott and Starwood is the best course for both companies and offers the best value to Starwood shareholders.” Marriott added that it is “in the process of reviewing the Anbang consortium’s proposal and is carefully considering its alternatives.”
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