acquisition Archives - TravelSkills

Big step in Alaska Airlines takeover of Virgin America

December 6, 2016

The new Premium Class will be on Alaska's 737-800s and 900s. (Image: Alaska Airlines)

Alaska Air’s takeover of Virgin America is ready for take off. (Image: Alaska Airlines)

At long last, the Department of Justice has approved Alaska Airlines’ acquisition of Virgin America. In order to get the deal done, all Alaska has to do is unload 45 code share routes with American Airlines- and deal with a pesky lawsuit. UPDATE: Dec 7> Alaska announced that is has settled this lawsuit, but did not disclose terms

Interestingly enough, Alaska’s partnership with frenemy Delta Air Lines will likely remain intact. And Alaska won’t have to give up any gates at SFO or LAX as had been speculated.

A press release from Alaska states: “Alaska did agree to implement limited changes to its codeshare agreement with American Airlines. The majority of Alaska and American codeshare flights will remain intact. The DOJ did not require changes to any other agreements between Alaska and American, including interline or reciprocal loyalty agreements, or any of Alaska’s other airline partnerships.”

Graphic touting the strengths of the combined carriers from Alaska Air’s SEC filing

Read: Alaska Airlines SEC filing regarding the deal.

What’s next? Now that the DOJ has concluded its review and all parties seem to be in agreement over terms of the takeover, the next step is for Alaska Air to take care of that pesky antitrust lawsuit in San Francisco opposing the merger. [UPDATE: Dec 7> Alaska announced that is has settled this lawsuit, but did not disclose terms] A group of 41 fliers and travel agents is suing Alaska Airlines, saying that the takeover of Virgin will lessen competition resulting in higher fares and fees. A US district judge in San Francisco has said that a trial would take place soon after the DOJ decision- so stay tuned for more on that…

In regard to the lawsuit, Alaska Air says that, “Lawsuits of this kind are not uncommon with mergers. The company believes the plaintiffs’ claims are without merit and plans to defend its acquisition of Virgin America accordingly.”

Virgin’s “business as usual ” notification on its website

Right now, it’s still business as usual for both carriers until the deal officially closes- and no changes to inflight experience for 12 months. For example, Virgin is currently offering a great deal for those interesting in first class tickets home for the holidays. Flyers should not expect to see or hear many details until the civil lawsuit is out of the way- and that could happen in a matter of weeks. UPDATE: Dec 7> Alaska announced that is has settled this lawsuit, but did not disclose terms

What will happen to the Virgin America brand? Bloomberg reports, “The company will retain the Alaska Air name, brand and Seattle headquarters. It will explore how the Virgin America brand, which grew out of U.K. billionaire Richard Branson’s business empire and has strong customer loyalty, might be used in the combined airline, Alaska Air has said.”

So what do you think? Are you ready for the deal to be done, or should it be blocked for competitive reasons? It remains to be seen what Alaska plans to do with the Virgin America brand. Thoughts?

The combined networks of Alaska Air and Virgin America (CLICK for clearer image, more info)

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Another deadline in the Virgin America – Alaska Airlines deal

December 1, 2016

Alaska Airlines & Virgin America's merger has been slightly delayed. (Image: Alaska Airlines)

Alaska Airlines & Virgin America’s deal: Still delayed. We’re fatigued (Image: Alaska Airlines)

Here we are in December, and there’s still no final word on the long-awaited, much anticipated acquistion of Virgin America by Alaska Airlines. The deadline for the deal keeps getting pushed back…and today, we’ve learned of yet another delay. And another deadline…

Sources close to the dealmaking told TravelSkills a final decision by the Department of Justice (DOJ) is now expected by the “end of the year.” The takeover was initially announced last April with a goal of closing in the fourth quarter of this year. As the fourth quarter approached, a deadline of September 30 was set for the Department of Justice to give its okay to the deal… or seek to block it.

Then a new deadline of October 17 was set for the the DOJ decision. That date passed, and on October 20, Alaska Air CEO Brad Tilden said in an earnings call that, “there is a process at play” and “we’re not quite there yet.” Then the deal was hit by an antitrust lawsuit in San Francisco.

In early November, an image of a purported Virgin America – Alaska Airlines 737 with a new livery made the rounds, which has us all thinking a deal was imminent. But no. Then in mid-November, Virgin America lawyers said in a filing Northern District Court of California that “Alaska believes that Department of Justice review will likely be completed by the end of November.”

That blue tail could be the look of the future for Alaska Airlines (Photo: Brandon Farris)

So here we are in December and there’s still no DOJ decision. Virgin America and Alaska are still operating as two separate entities. Employees and members of both airline frequent flyer programs are waiting and wondering about the future. Fatigue about the whole affair is setting in…

What’s next? Well, insiders have told us this is how it will go down: The DOJ should complete its review by the end of December and issue a press release on the decision. Alaska Airlines will then respond to that decision (likely with a press release of its own). Once all parties are in agreement over the terms of the take over, the next step is for Alaska Air to take care of that pesky antitrust lawsuit in San Francisco opposing the merger. And then, after all that, we’ll see the deal go down.

So there you have it. Another deadline for a DOJ decision is now set for December 31. Will it happen? Who knows. But it’s a bit strange that a DOJ decision keeps getting pushed back, despite Alaska Airlines’ claims that progress is being made.

What do you think? Is this a done deal, or is it in jeopardy? Please leave your comments below.

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Finally: Battle for Starwood Hotels may be over

March 31, 2016

The battle between Marriott and China’s Anbang Insurance for Starwood Hotels may be over. (Image: Marriott)

According to news reports Thursday, there’s been another big twist in the see-saw bidding battle between Marriott International and a group led by China’s Anbang Insurance to see who will acquire Starwood Hotels – and this may be the final chapter.

The Wall Street Journal reported Thursday afternoon that the Anbang-led group has withdrawn its latest bid for Starwood, which was valued at $14 billion, or $82.75 a share. That clears the way for Starwood to move ahead with a shareholder vote on Marriott’s most recent offer, which valued Starwood at $79.53 a share.

News reports said Anbang didn’t give Starwood a reason why it was backing away from its last offer. There had been speculation in Chinese media earlier this week that Anbang could have run into trouble with China’s insurance regulators for seeking to invest more of its assets in foreign companies than is permitted by Chinese law.

The proposed Marriott-Starwood merger has already passed antitrust scrutiny by the U.S. and Canadian governments.

If it is finally accomplished, Marriott’s acquisition of Starwood would create the world’s largest hotel company. An Anbang acquisition of Starwood, if it happened, might have also created problems for business travelers working for the U.S. government or its contractors who wanted to stay at Starwood properties. After Anbang bought the Waldorf-Astoria in New York City in 2014, the State Department moved members of the U.S. delegation to the United Nations out of that hotel, allegedly due to concerns about Chinese electronic espionage at the hotel.

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Star(wood) Wars, Part IV: Anbang strikes back

March 28, 2016

Will Anbang Insurance thwart Marriott's latest bid to buy Starwood? (Image: Marriott)

Will Anbang Insurance thwart Marriott’s latest bid to buy Starwood? Will China’s government block Anbang? Stay tuned. (Image: Marriott)

Just when it looked like Marriott International had once again secured a deal to acquire Starwood Hotels & Resorts by sweetening Its original offer, a revised proposal has been submitted by Marriott’s counter-bidding nemesis, China’s Anbang Insurance and its co-investors.

Feeling a bit weary of all the back-and-forth? We are! Anyway, here’s the latest….

Starwood’s board said today that the latest offer from Anbang & company – an all-cash bid of $82.75 per share for all Starwood stock, and the fourth bid to be made in this see-saw battle – is “reasonably likely” to be superior to Marriott’s latest bid, which was estimated to be worth $79.53 per share. That last Marriott bid included $21 per share in cash and the rest on Marriott stock. (Starwood said Anbang’s newest bid, made on March 26, was $81 per share, but in discussions over the past two days, the bidders raised their price to $82.75.)

Once again, Starwood’s board said it would closely examine and discuss the new Anbang bid, and would continue to discuss “non-price terms related to the (Anbang) consortium’s revised proposal.” The board added: “there can be no assurance that discussions will result in a binding proposal from the consortium,” or that it will result in an agreement to sell Starwood to Anbang and friends.

Breakfast overlooking Hanalei Bay at Starwood’s St Regis Princeville (Photo: Chris McGinnis)

The Starwood board also reaffirmed that it “has not changed its recommendation in support of Starwood’s merger with Marriott.”

Meanwhile, there were reports that China’s government might also toss a monkey wrench into Anbang’s overseas buying spree. Caixin Online, a Chinese business news website, reported that the government’s China Insurance Regulatory Commission could be on the verge of blocking Anbang’s bid for Starwood and a separate Anbang offer for Strategic Hotels – a U.S.-based group that own several high-end hotels and resorts.

The problem, Caixin Online said, is that Chinese regulations bar the nation’s insurance companies from investing more than 15 percent of their assets abroad, a limit that would apparently be exceeded by either of the two proposed acquisitions.

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Marriott gets Starwood back…for now

March 21, 2016

Marriott’s popular Residence Inn Downtown Seaport in Boston (Chris McGinnis)

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.

Starwood’s newish (and very popular) Aloft brand- at SFO (Photo: Chris McGinnis)

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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Developing: Starwood + Marriott on the rocks?

March 18, 2016

Marriott's acquisition of Starwood is suddenly far from a done deal. Sheraton Chicago (Photo: Sheraton)

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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Surprise: New bid for Starwood emerges

March 14, 2016

The new Westin at Denver's airport is a short walk from the terminal. (Image: Jim Glab)

Starwood’s brand new Westin at Denver’s airport is a short walk from the terminal. (Image: Jim Glab)

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.

A Chinese firm that bought the Waldorf-Astoria is leading a new bid to acquire Starwood. (Image: Waldorf-Astoria)

The Chinese firm that bought the Waldorf-Astoria is leading a new bid to acquire Starwood. (Image: Waldorf-Astoria)

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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Hotel consolidation takes another big step forward

December 10, 2015

London’s prestigious Savoy Hotel will become part of AccorHotels. (Image: The Savoy)

Less than a month after Marriott said it will buy Starwood Hotels for $12.2 billion, another big transaction has been announced that will shrink the number of major players in the global lodging industry even more.

This time, the buyer is the French lodging giant AccorHotels, and the target is a trio of luxury hotel brands: Fairmont, Raffles and Swissotel. The sellers include the Qatar Investment Authority, Kingdom Holding Company of Saudi Arabia, and Oxford Properties, an Ontario Municipal Employees Retirement System company.

The acquisition is nowhere near the size of Marriott’s Starwood purchase — the three brands include just 155 hotels and resorts, 40 of them still under development, with a total of 56,000 rooms. But the individual properties include some of the world’s most prestigious luxury hotels, like The Plaza in New York, The Savoy in London, Le Royal Moncaeu-Raffles Paris, the Fairmont in San Francisco, Swissotel-The Stamford in Singapore and many more. The 155 hotels are spread across 34 countries, mostly in North America and Europe.

AccorHotels said it will pay $840 million in cash, and will issue 46.7 million new Accor shares, with the Qatar Investment Authority getting a 10.5 percent stake in Accor and the Saudi company picking up 5.8 percent.

One jilted suitor in the Marriott deal was InterContinental Hotels Group (IHG), which was widely rumored earlier this year to be moving in on an acquisition of Starwood. And the same thing happened in this transaction: Just three months ago, financial media reported that IHG was on the verge of snapping up Fairmont, Raffles and Swissotel for $2.9 billion. But the owners apparently preferred Acccor’s offer.

Accor said the acquisition will bolster its own operations thanks to the integration of a customer base that includes 3 million loyalty members, three-fourths of them North Americans. It said the deal will give it a total of 500 luxury and upscale locations worldwide, making it “one of the key global players in this segment.”

Accor has some 3,800 properties worldwide, with a number of brands covering all major market segments, including Sofitel, Pullman MGallery, Grand Mercure, Novotel, Mercure, Adagio, and Ibis. It just passed the 500,000-room mark with the opening of a pair of new properties at Paris Charles de Gaulle Airport — a Pullman and an Ibis Styles hotel.

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Marriott, Starwood will merge

November 16, 2015

One of Marriott's newest, largest hotels is on sale today only! Marriott Marquis Washington DC

One of Marriott’s newest, largest hotels: The Marriott Marquis Washington DC (Image: Marriott)

We’ve seen plenty of rumor and speculation in recent months about what would happen to Starwood Hotels & Resorts since its board of directors decided to look for ways to maximize shareholder value. First there was talk of a merger with InterContinental Hotels Group. Then just last month, Hyatt was said to have its eye on the company.

But now there’s a new suitor, and this time it’s no rumor: Marriott International announced it will pay $12.2 billion — most of it in Marriott stock — to buy Starwood.

The combined entity will be the world’s largest lodging group, with 1.1 million rooms in 5,500 properties worldwide — not to mention the world’s largest hotel loyalty program; Marriott Rewards currently has 54 million members, while Starwood Preferred Guest claims 21 million.

San Francisco’s famous Palace hotel to become a Marriott (Image: Starwood)

The deal is subject to approval by shareholders at both companies as well as regulatory approvals. And that raises a question: If the U.S. Justice Department’s Antitrust Division has been getting a little tougher on airline mergers — e.g., it wouldn’t approve the American-US Airways deal until the airlines agreed to give up gates and slots at key airports — will it do the same with huge hotel mergers where the combined companies would control a substantial share of rooms in specific markets?

Marriott CEO Arne Sorenson told the Wall Street Journal that Marriott controls about 10 percent of U.S. hotel rooms and Starwood has 3 to 4 percent, and said that in general, the U.S. hotel industry is “highly competitive and dispersed.”

If all the necessary approvals are forthcoming, the companies said they expect to close the transaction in the middle of next year.

“The transaction combines Starwood’s leading lifestyle brands and international footprint with Marriott’s strong presence in the luxury and select-service tiers, as well as the convention and resort segment, creating a more comprehensive portfolio,” the companies said in a statement.

Marriott said it expects to “accelerate the growth of Starwood’s brands” after the transaction goes through, giving the combined company “a broader global footprint.”

Speaking of brands, it remains to be seen what will happen on that score, since the two companies currently have about 30 brands — nice for segmenting your market, but it might be daunting for customers to remember what each brand represents. Could a consolidation of brands be in the works if the merger goes through?

At first glance, we could see W Hotels becoming Renaissance hotels. St Regis and Luxury Collection would become Ritz-Carlton or maybe Bulgari. Most Sheratons or Westins or Le Meridiens could be Marriotts or maybe JW Marriotts. Most Four Points hotels could be Marriott Fairfield Inns. Aloft hotels…hmm maybe Courtyards?

For reference: All Marriott brands | All Starwood brands

Stay tuned!

What’s your first reaction to this blockbuster news? Please leave your comments below.

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Will Hyatt buy Starwood?

October 28, 2015

Entrance to the Hyatt Regency Atlanta. (Image: Hyatt)

Entrance to the recently renovated Hyatt Regency Atlanta. (Image: Hyatt)

CNBC reported this morning that Hyatt may be on the verge of acquiring Starwood, as the hotel industry is following the airlines in a relentless march toward consolidation.

The business news channel said that the deal under discussion would let Hyatt acquire Starwood for an offer of cash and stock, and that Hyatt would retain control of the combined company.

Lodging giant Starwood has been in play for the past six months, since Earlier rumors suggested that both InterContinental Hotels Group and Wyndham Worldwide might have been looking to merge with Starwood.

Earlier this week, the Wall Street Journal reported that three Chinese companies were anxious to bid on Starwood, although the Chinese government wanted to select only one of them to proceed with an offer.

Starwood’s inventory includes more than 1,270 properties in 100 countries, while Hyatt lists 618 locations in 51 countries. According to CNBC, Hyatt is worth $7.23 billion, while Starwood’s valuation is $12.75 billion.

Hyatt’s brands include Andaz, Hyatt Regency, Hyatt Hotels, Park Hyatt, Hyatt Place, Hyatt House, Grand Hyatt, the new Hyatt Centric and a couple of small resort brands.

In Starwood’s brand stable are The Luxury Collection, St. Regis, W, Westin, Le Meridien, Sheraton, Four Points, Aloft, Element, and the Tribute Portfolio (a collection of independent affiliated hotels that use Starwood’s reservations system and participate in its loyalty program).

Which brand would you prefer to see stick around after such a merger: Hyatt or Starwoodk? Why? Please leave your comments below.

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