Marriott’s acquisition of Starwood is suddenly far from a done deal. Pictured: Sheraton Chicago (Photo: Sheraton)
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 acquisition of Starwood is suddenly far from a done deal. (Image: American Express)
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.”
Stay tuned. How do YOU think this will play out? Do you care? Please leave your comments below.
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RunningJock says
March 23, 2016 at 1:32 pmToo big of a deal. Would not be good for the consumer/traveler. Starwood would definately decrease as a luxury brand by both product and brand.
Don’t let Marriott buy you Starwood!
Salvatore Johnson says
March 19, 2016 at 5:49 amI would not shed a single tear if this deal never happens.
It’s the worst deal for the consumer and traveler, just about as bad as United/Contental merger, U.S. Air/American merger and the Delta/Northwest merger.
It will hurt the traveling public with not only higher cost in room increases, but at the same time seriously reduce the inventory of rooms when the chain gets rid of those properties that are low earners by shutting hotels down.
We are living in a dangerous time in which big companies are consolidating and making hugh profits, the biggest example is the airlines. They are now as powerful as banks and in a position of not failing, if they do get in trouble it would be like 2008 in which the government would have to give them a bail-out in the interest of our way continuing.
Sorry this is a terrible deal and I for one hope it never happens.
DrewT says
March 18, 2016 at 5:21 pmThis could be a double-edged sword for Starwood. I read in another thread somewhere that, if Starwood is purchased by Anbang, this would probably be the end of all US Gov’t use of Starwood properties. How much business does Starwood do with the US Gov’t? Is it worth losing that much income to make this deal? That may be why the Board was still recommending to merge with Marriott.
netopiax says
March 18, 2016 at 11:22 amI believe the timeline is a little off in your accounting of the news. The “Starwood’s Board has not changed its recommendation in support of Starwood’s merger with Marriott” quote came out BEFORE Anbang sweetened its offer from $76 to $78 per share. Once that happened, the board decided to move forward with Anbang in favor of Marriott.
In any case, as an SPG Platinum I’m hopeful that Starwood will continue on its own, which is the likely scenario with Anbang as the owners.