Starwood Gets Higher Offer From Anbang-led Group, Threatening Marriott Deal--4th Update
March 28 2016 - 1:47PM
Dow Jones News
By Joshua Jamerson
The battle for Starwood Hotels & Resorts Worldwide Inc.
continued Monday as the group led by China's Anbang Insurance Group
Co. increased its bid for the hotelier to $14 billion, raising the
stakes in the high-profile bidding war with Marriott International
Inc.
Starwood said the new offer from Anbang, a Chinese insurance
giant, is likely to be a "superior proposal" to Starwood's $13.6
billion takeover agreement with Marriott. Such a designation allows
Starwood to engage in discussions with and provide diligence
information to the consortium in connection with its proposal.
Marriott on Monday reaffirmed its commitment to acquiring
Starwood, arguing that its deal was the best course because the
combined company would have a larger global footprint with a wider
choice of brands for consumers. In addition, Marriott warned
Starwood stockholders about getting lured by the higher offer.
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 said.
Representatives from Anbang and Starwood declined to comment on
Marriott's comments.
Starwood's stock rose 2.2% to $83.93 in midday trading in New
York, as Marriott's shares increased 3.8% to $71.27.
The revised, nonbinding offer from the Anbang group raises the
proposed all-cash purchase price to $82.75 a share. Anbang's
consortium also includes J.C. Flowers Co. and Primavera Capital
Ltd.
Starwood, the owner of the Westin and Sheraton brands among
others, said it received a sweetened offer from Anbang of $81 a
share in cash on Saturday. Later that day, following discussions
between the two parties, the Anbang consortium raised its all-cash
proposal to $82.75 a share.
In comparison, the Marriott agreement valued Starwood's shares
at $79.53 each. Under that revised deal, Starwood shareholders
would receive $21 in cash and 0.8 Marriott shares for each Starwood
share.
The original deal between the two companies, in November, valued
Starwood at $72.08 a share. Earlier this month, the group led by
Anbang offered $76 a share in cash and then raised its offer to $78
a share.
A combination of Starwood and Marriott--the owner of Courtyard
by Marriott and the extended-stay Residence Inn--would create the
world's No. 1 hotel chain with more than 1 million rooms and 30
brands.
On Monday, Marriott and Starwood each adjourned their respective
stockholder meetings to vote on the transaction until April 8. If
blessed by regulators and shareholders, the deal could close in
mid-2016, the companies have said.
If the Marriott deal falls apart, Starwood would pay a breakup
fee of $450 million, up from $400 million in the previous pact. If
that fee is triggered, Starwood also would be on the hook to pay
Marriott as much as $18 million for costs related to financing the
deal.
The Wall Street Journal had reported, citing a person familiar
with Anbang's thinking, that the slight increase in the breakup fee
indicated that Starwood was leaving the door open for Anbang to
raise its offer again.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
March 28, 2016 13:32 ET (17:32 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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