Daily Management Review

Marriott’s Offer for Starwood Topped by China Led Group


Marriott’s Offer for Starwood Topped by China Led Group
In what is being termed as a move to derail a pending deal between Starwood Hotel & resorts Worldwide Inc. and Marriot International Inc., a group led by China’s Anbang Insurance Group Co. has made a $12.8 billion takeover offer to Starwood.
As Chinese companies view high-quality real estate as a haven for savings and are on the look out to snap up properties in the U.S., Anbang’s move is viewed as the latest in that category.
$76 a share in cash for all shares outstanding of the company is what the Anbang consortium is offering. This price is a 7.9% premium to Starwood’s closing stock price of $70.42 on Friday. According to Friday’s closing price, Marriott’s cash-and-stock deal is valued at $65.38 a share, or about $11 billion.
While saying that the company is permitted to talk with rival bidders until March 17, Starwood said its board hadn’t changed its recommendation in support of the merger with Marriott while talking about the new bid. Starwood didn’t name members of the group that made the offer.
while saying it was still committed to its deal for Starwood, Marriott identified Anbang as the leader of the rival consortium.
A representative from Anbang declined to comment. Starwood couldn’t be reached for comment.
Starwood would owe Marriott a $400 million termination fee if the former were to terminate the deal with it. Shareholders of each company are scheduled to vote on the deal on March 28.
Shares of Starwood rose 6.9% to $75.27 in late-morning trading in New York. Marriott shares rose 2% to $70.26.
After it received a waiver from Marriott allowing it to engage in discussions, Starwood said it received the rival offer on March 10 and began discussions with the consortium a day later. Starwood is the owner of the Westin and Sheraton brands among others.
People familiar with the matter said that Chinese investment firm Primavera Capital Group and J.C. Flowers & Co. are also part of the group making the offer. The companies couldn’t be reached for comment.
With more than one million rooms—and bring together 30 brands across all lodging segments, from Starwood’s higher-end W Hotels and St. Regis brands to Marriott’s limited-service offerings like Courtyard by Marriott and its extended-stay chain Residence Inn, the deal which was agreed upon by Marriott in November, would create the No. 1 hotel company globally.
Of late there has been a push by Chinese buyers to buy U.S. hotel properties. According to hotel data tracker STR Analytics, prices that that exceeded $1.4 million a room were paid by Asian buyers in recent years who have acquired New York’s Plaza Hotel and Carlyle Hotel.
The Historic Waldorf Astoria in Manhattan, the flagship hotel of Hilton Worldwide Holding’s was sold to Anbang for $1.95 billion in October 2014. People familiar with the situation said that Anbang is also near a deal to buy Strategic Hotels & Resorts Inc. from a Blackstone-managed real-estate fund. A substantial presence across the luxury hotels across the U.S. would be created  for Anbang by the deal. The price Anbang is paying couldn’t be determined.

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