Starwood must feel like the most-wanted girl at a dance right now. First she was all ready to accept Marriott’s suit, then Anbang came along and made her a better offer. Then over the weekend, Marriott upped its offer and now, barring any further dramas, the two should walk down the aisle.
Arne Sorenson: “The combination of Marriott and Starwood will create a premier lodging company.” (Image credit: Marriott International)
Arne Sorenson, president and CEO of Marriott International, in a letter to associates, announced that “Starwood’s board of directors decided that our revised bid, submitted over the weekend, is superior to the Anbang consortium offer, and has accepted our new terms”.
The new offer values Starwood Hotels & Resorts Worldwide at US$13.6 billion, topping an offer from a group of investors led by China’s Anbang Insurance Group Co.
Sorenson gave an overview of the process:
- Marriott increased the cash paid per share of Starwood stock to US$21.00 from US$2.00.
- The deal is still a combination of stock and cash consisting of US$10.0 billion of Marriott International stock based on the closing price of US$73.16 on March 18, 2016 and US$3.6 billion of cash.
Beyond the math, he said, “the simple fact remains that the combination of Marriott and Starwood will create a premier lodging company that will offer broader choice for guests, greater benefits for owners and franchisees, more opportunities for associates and increased value for shareholders of both companies.
“Over the course of the last few months we’ve had an opportunity to learn even more about Starwood through our integration process and we believe that the benefits of combining both companies are even more compelling than our original expectations.”
Aloft – a Starwood brand (Image credit: Starwood Hotels & Resorts)
Marriott expects to save about US$250 million a year with the merger. The cost savings estimate increased by US$50 million a year from the initial one made November 2015.
Sorenson is upfront about the fact that things could still change “but no bids can be made or considered after Starwood’s shareholder vote takes place”.
“We’ve made it clear to Starwood that this offer is aligned with the value we see in Starwood – particularly after months of due diligence through our integration process. The revised agreement includes a break-up fee of US$450 million due to Marriott should Starwood ultimately decide to accept another bid.
“But our focus right now is on continuing the process of integration and completing the closing conditions, and we and Starwood believe this revised bid offers the best course for Starwood and Marriott shareholders.”
For the sake of employees of Starwood, we certainly hope there’s a happy ending to this on-off union.
• Featured image credit: Marriott International
