Here's What Starwood Is Telling Employees About The Takeover Bid

Perhaps relief for Marriott....and sweet $400mil breakup fee.

Make the Chinese pay more.

If Anbang ends up running Starwood like Geely is currently running Volvo, I think the brand(s) will be just fine, if not better.

God willing and the creek don't rise that Marriott walks away and leaves Starwood alone.

Chinese insurers are looking for investments in real estate assets and they view the Starwood purchase as a good opportunity to get into the hotel business and not just own the buildings. In a low interest rate environment this is an interesting opportunity for them, the question that I have is what happens if the insurer has a financial problem and the impact for Starwood. Anbang is a very new insurance company and their owner wants to be China's next Warren Buffett but who knows... I'm not in favor of Marriott acquiring Starwood and had hoped it would have been Hyatt doing the acquisition.

Aren't many Starwood properties franchised out these days?

I know that's the case with a majority of Wyndham's flags.

@Ed, agree with the concern re: the insurer's stability. it's probably more political than financial - Anbang execs have great connection to the country's top political figures/families which seems to be a major factor for the firm's rapid expansion in recent years. we'll see how long that tie will last...

@ Nik -- Yep, they own very few properties.

@Lucky @Ed Outside of the political motivations behind this, I think the insurance company saw, and sees, the following:
1. Solid income stream from franchise and royalty fees from franchisees
2. Growth in China and India. For all the talk about their respective economies slowing down, there's still a HUGE unmet demand for flags of all levels in these respective countries.
3. For the immediate future, it's a safe investment

@Nik @ Lukcy interesting that most of the properties are franchised, didn't realize that. In which case the income may be of more interest as you note. If the stability of the insurer is threatened from too much rapid growth worldwide and too many claims in the insurance business, then they won't be able to invest more in new properties around the world which could reduce the quality of the SPG brand potentially. The political connections are interesting as that can change quite quickly. The next week will be interesting to watch!

"Tip of the hat to The Points Guy"

If the Marriott deal falls through, it will certainly be good for Starwood loyalists. However, if Marriott is determined to get bigger by acquisition, they could go after Hyatt. You can say it's mostly family owned and they won't sell, but as we all know, money talks.

@Tony -- By the same token, if the Marriott-Starwood deal goes through it would the Blackstone Group going after Hyatt 😉

Lucky -- I think you're putting undue emphasis on the portion of the letter that says the board has not changed its recommendation with respect to the Starwood offer. That is almost certainly because that would be a breach of their contract with Marriott. It appears at the moment that the only authority that Starwood's board has is to declare the offer superior, triggering Marriott's right of first refusal. But the letter makes it very clear what the board will do if Marriott does not match or exceed the offer: "the Board intends to terminate the Marriott merger agreement and enter into a new definitive agreement with the consortium . . . ."

This letter was very carefully drafted to ensure compliance with the terms of the Marriott agreement. Where this gets messy is if Marriott comes forward with a new offer that is not an apples to apples comparison, that Marriott declares is "as good or superior" as the consortium's offer. If Starwood and Marriott disagree about what is "as good or superior," this thing would be destined for litigation, although we don't know what's in the agreement. It might call for an arbitrator to decide that question in a steamlined procedure, or it might give either Marriott or Starwood the right to some sort of presumption that an offer is not (or is) "as good or superior."

In short, don't get hung up on the portion that says that Starwood's board hasn't yet pulled its recommendation to shareholders. It probably can't, and it was trying to make very clear in this letter that it understands it's contractual responsibilities. But that doesn't mean that Starwood intends, even after March 28, to adhere to that recommendation, which it clearly is saying it won't unless Marriott ponies up.

So will Starwood's new ads end in "Love you long time"?

Dumb question: how will this affect hilton? I mean their high end hotels are waldorf astoria branded.. I am not sure the sec would take to kindly to a foreign investor heavily involved in two hotel companies, even if it is just by name..

@Nik et al. There is a difference between franchised and managed hotels, though in both cases Starwood does not own the real estate. They, like all the chains, still own a few key properties.. All of the key flagship international properties are managed by Starwood; some of the brands, ie St Regis, do not have a franchise model; they are all managed by Starwood. Despite Anbang's purchase of the Waldorf=Astoria in NYC from Hilton Worldwide, Hilton is still managing the hotel. A little strange if Anbang succeeds in the bid with Starwood, but not unusual. Blackstone own many diversely branded hotels, while still maintaining a 50% stake in the global Hilton corp.
There was a lot of speculation at Starwood Corporate, who would stay and who would go under the Marriott merger, as effectively there is a lot of duplication and Marriott would look to gain synergies. With the new investor, I would speculate there would be fewer redundancies.
In any case, I agree with Ben that more consolidation is a bad thing--it will be interesting to see how this unfolds.

We have enough Chinese owned companies. I'll pass on Starwood then. The Chinese buy up our assets, ship jobs overseas, drop their babies on our soil so they can have all of the benefits of citizenship, and dump all of their cheap crap products in the stores (and on eBay) for stupid people to consume like junkies using heroin. The big picture for the US is not pretty.

@tara thanks.

That snake JC Flowers is again the hand under the skirt. Doesn't matter if its a struggling bank or an undervalued hotel chain, the bid manipulation for quick gain and flip is in full force. It's like a pump and dump on an organizational level. How he and Soros have robbed our country blind is beyond comprehension.

@tara It is just business.

@tara I bet you are a big-time Donald Trump supporter.

Once again the naive foreigners are being bilked by Yankee ingenuity. The Japanese squandered all their wealth from the 80s on buying overpriced US companies and then crashed and have been stuck in a depression for 20 years (the depression is so bad that their young dont want to have children anymore and the Japanese race is dying off). Now the Chinese are falling for the same . The house always wins and remember when it comes to the global economy USA is the house (the house prints the casino tokens/USD)