Marriott gets Starwood back…for now

The acquisition of Starwood Hotels & Resorts by Marriott International appears to be back on again, after Marriott sweetened its bid to beat an unsolicited offer that had come from a consortium led by China’s Anbang Insurance.

Last week, Starwood had decided the all-cash bid from the Anbang-led group was superior to Marriott’s initial offer, so it canceled its merger agreement with Marriott. But today (Monday), Starwood said Marriott has come up with a new bid of cash and stock that would ultimately give Starwood shareholders about $1.50 per share more than the Anbang group’s offer.

As a result, Starwood said it has now signed an amended merger agreement with Marriott, and its board has unanimously voted to recommend approval of the Marriott deal to shareholders, who are expected to vote within a couple of weeks. Marriott’s new bid puts a value of $13.6 billion on Starwood, and would give Starwood shareholders a 34 percent stake in the combined company.

The revised agreement puts the much discussed Starwood-Marriott merger back on track to close by the middle of this year, the companies said. The deal has already passed antitrust muster with the governments of both the U.S. and Canada.

According to a TravelSkills poll, Marriott has its work cut out when it comes creating a combined company palatable to frequent travelers. In the poll, nearly half currently feel negatively about the proposed combo. Most Marriott Rewards members see the merger as an opportunity to earn more points and to have more options for redemptions. Most SPG members, especially those with elite status, fear losing key benefits such as upgrades, in a Marriott managed program.

Marriott CEO Arne Sorenson said that once the merger is finalized, “We expect to accelerate the growth of Starwood’s brands, leveraging Marriott’s worldwide hotel development organization and owner and franchisee relationships…The company will have a broader global footprint and the most powerful frequent traveler programs in the industry.” Marriott said it expects that synergies from the merger will lead to cost savings of $250 million annually within two years after closing.

This drama is still not final, so stay tuned as we monitor developments. Marriott and Starwood boards initially were to vote on the merger on March 28– those meetings are now on for April 8.

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