Chinese investors make cash bid to Starwood

Could Starwood's unsolicited new bid rock the Marriott merger boat?

Could Starwood's unsolicited new bid rock the Marriott merger boat?
Could Starwood's unsolicited new bid rock the Marriott merger boat?

Starwood Hotels & Resorts Worldwide revealed this week, on March 14, that it had received an “unsolicited acquisition proposal”.

According to the statement by Starwood, the hotel group had received a non-binding proposal on March 10 2016, requesting to purchase all of Starwood’s outstanding shares of common stock for US $76.00 per share in cash.

Starwood also stated that the acquisition of Starwood by Marriott International is currently priced at US $63.74 per Starwood share.

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Starwood’s release was quickly followed by a statement on March 14 from Marriott International, which said that the Marriott group “reaffirmed its commitment to acquire Starwood Hotels & Resorts Worldwide”.

In the statement, Marrriot International also named the unsolicited bidder as Chinese investor group Anbang Insurance Group Co.

Reuters has estimated that Anbang’s bid equates to US $12.8 billion cash. 

The news follows other hotel acquisitions by Anbang, including an agreement to acquire Strategic Hotels & Resorts Inc for US $6.5 billion, as well as the acquisition of the Waldorf Astoria Hotel in New York for US $2 billion.

Yesterday, Starwood re-confirmed that it had entered into a merger agreement with Marriott, previously announced in November 16 2015, where Marriott would acquire Starwood in a stock and cash transaction.

Marriott has given Starwood a waiver to discuss the new cash proposal (the waiver is due to expire on March 17) with the new bidder.

In the statement of March 14, Starwood stated: “Starwood’s Board of Directors has not changed its recommendation in support of Starwood’s merger with Marriott. The Board, in consultation with its legal and financial advisers, will carefully consider the outcome of its discussions with the Consortium [consortium of companies that made the bid on March 10] in order to determine the course of action that is in the best interest of Starwood and its stockholders.”

In the statement made by Marriott International yesterday, the hotel group stated: “Under the terms of the merger agreement, should Starwood terminate its agreement with Marriott because it decides to enter into another deal or should Starwood change or withdraw its recommendation to its stockholders to vote in favour of the Marriott merger (and in certain other circumstances), Starwood would be obligated to pay Marriott a $400 million termination fee in cash.”

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