Boy, the battle for Starwood must be one of the most reality show-esque things we’ve seen in the travel industry over the past couple of years, perhaps along with the never-ending battle between Akbar Al Baker and Richard Anderson, and the battle between Alaska and Delta in Seattle.
This morning we learned that Starwood has received yet another offer from Chinese insurance group Anbang, for $82.75 in cash per share of Starwood. Starwood’s Board of Directors has indicated that this is “reasonably likely to lead to a superior proposal,” and that the two companies are now discussing non-price related terms. So the board sounds confident in the offer, but not completely convinced… yet.
This comes after:
- Last November, Marriott agreed to purchase Starwood, with each share of Starwood stock being worth 0.92 Marriott shares plus $2 in cash
- Then in March, Chinese insurance group Anbang made an offer of $78 in cash per share, which Starwood accepted
- Then days later, Marriott made an offer which Starwood accepted, where each share of Starwood stock was worth 0.8 Marriott shares plus $21 in cash
As of now it seems like Starwood is likely to go with the Anbang deal, given that the board has indicated that it’s likely a “superior proposal.”
Last time Anbang submitted an offer for Starwood, Marriott immediately said that they planned on countering. Well, this morning Marriott has issued a press release reaffirming their commitment to purchase Starwood, though it seems like they don’t plan on countering. As a matter of fact, Marriott still thinks their offer is better:
Marriott International, Inc. (NASDAQ: MAR) today reaffirmed its commitment to acquire Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT), confident that the previously announced amended merger agreement is the best course for both companies. The combined company will offer stockholders significant equity upside and greater long-term value driven by a larger global footprint, wider choice of brands for consumers, substantial revenue synergies, and improved economics to owners and franchisees leading to accelerated global growth and continued strong returns.
The press release goes on to talk about the great synergies between the two companies, and how they think the shareholders will vote in favor of the merger on April 8. As of now Starwood’s board of directors hasn’t yet changed its recommendation to merge with Marriott, so we’ll see what happens.
What’s interesting is that rather than calling into question the pricing of the deal between Starwood and Anbang, Marriott raises other doubts in regards to the Anbang takeover:
Starwood stockholders should give serious consideration to the question of whether the Anbang-led consortium will be able to close the proposed transaction, with a particular focus on the certainty of the consortium’s financing and the timing of any required regulatory approvals.
Marriott basically seems to be acknowledging that Anbang’s offer is better in terms of price, but might be more complicated otherwise.
Bottom line
It’ll be really interesting to see how this plays out. While nothing is stated explicitly, reading between the lines it seems like Marriott won’t be raising their offer further, but rather this deal comes down to what Starwood’s Board of Directors thinks is the most compelling offer. On one hand it’s tough to argue with the certainy of an all cash offer, which is why Marriott is calling into doubt Anbang’s ability to close the deal.
This is very much still “developing,” and anything can happen. Here’s to hoping the deal with Anbang closes, and Marriott will at least get up to $468 million worth of breakup fees…
Given where things stand now, what are you hoping will happen (and what do you think will happen)?
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