Starwood to terminate Marriott deal for superior Anbang offer
19 March 2016
Starwood Hotels & Resorts Inc yesterday said that it plans to terminate the proposed deal to be acquired by Marriott International Inc after it received a superior proposal from a consortium led by China's Anbang Insurance Group.
In November 2015, Marriott International struck a $12.2-billion cash and stock deal to buy Starwood Hotels in a bid to create the world's largest hotel chain with over 1.1 million rooms in over 5,500 hotels across 30 brands. (See: Marriot becomes world's largest hotelier with $12.2-bn Starwood acquisition)
Starwood's agreement with Marriott includes a clause where it could consider other offers until 17 March. Shareholders of each company are expected to vote on the deal on 28 March.
Starwood had also agreed to pay $400 million as termination fee if it were to terminate the agreed merger.
Last week, a consortium led by Anbang, owner of New York's iconic Waldorf Astoria, tabled a counter $12.84-billion bid for Starwood at $76 per share, and days later raised it to $78.00, or $13.6 billion.
Based on yesterday's closing price, Marriott's offer for Starwood was $68.06 per share, or around $11.5 billion.
Starwood, operator of Sheraton and Le Meridien chains of hotels, yesterday said that Anbang's cash offer was superior to Marriott's previously agreed cash and stock offer by nearly 15 per cent, and hence it was planning to terminate the proposed Marriott deal.
Marriott has until 28 March to come back with a higher offer or collect the $400-million breakup fee if Starwood agrees to a deal with Anbang.
The Anbang-led consortium includes US private equity firm J.C. Flowers & Co and Chinese buyout firm Primavera Capital.
Starwood has over 1,200 properties in some 100 countries with brands that include The Luxury Collection, W, Westin, Le Meridien, Sheraton, St. Regis, Aloft, and Element luxury hotels and resorts.
The Connecticut-based company has sold properties worth about $1.5-billion over the past two years, including its interest in Park Lane Hotel, London to Sir Richard Suttons Settled Estates.
Last April, Starwood hired investment bank Lazard to help it explore strategic alternatives including a possible sale or merger.
Anbang Insurance is one of the largest insurance groups in China with assets of around $250 billion. It has over 3,000 branches in 31 provinces around China, more than 35 million clients, and employs over 30,000 globally.
The Beijing-based insurer has recently made a push into buying overseas assets and made some high profile acquisitions, especially in Europe and North America.
Apart from the Waldorf Astoria, it has acquired Des Moines, Iowa-based Fidelity & Guaranty Life Insurance Co for $1.6 billion, Dutch life insurer VIVAT for $1.5 billion, Belgian insurer Fidea NV, Belgian banking operations of Delta Lloyd NV, a majority stake in South Korea's Tong Yang Life Insurance Co.