The race to acquire Starwood Hotels & Resorts took another turn on Monday when the Chinese consortium led by the Anbang Insurance Group increased its bid to approximately US$14 billion.
Marriott International had appeared to have secured the acquisition of Starwood last week, when its improved US$13.6bn offer was accepted. But despite there being a “break-up fee” of US$450 million inserted into the Marriott-Starwood agreement, Anbang appears not to be deterred.
On 26 March, Starwood’s board of directors stated that the bid from Anbang Insurance Group and Primavera Capital would be a “superior proposal” than its existing merger agreement with Marriott.
“The Starwood board, in consultation with its legal and financial advisors, will carefully consider the outcome of its discussions with the consortium in order to determine the course of action that is in the best interest of Starwood and its stockholders,” Starwood said in a statement. It added however, that “there can be no assurance that discussions will result in a binding proposal from the consortium.”
Anbang’s new bid is worth US$82.75 per share. This compares to Marriott’s most recent accepted offer, which value’s Starwood at US$79.53 per share. The Marriott offer also consists of US$10.0bn of stock and US$3.6bn in cash, while Anbang’s US$14.0bn bid is entirely in cash.
Marriott says it remains “confident that the previously announced amended merger agreement is the best course for both companies”.
“The combined company will offer stockholders significant equity upside and greater long-term value driven by a larger global footprint, wider choice of brands for consumers, substantial revenue synergies, and improved economics to owners and franchisees leading to accelerated global growth and continued strong returns,” it added.
But the fact that Starwood has broken its agreement with Marriott once suggests it would be willing to do so again, should it be happy with Anbang consortium’s new cash offer. And after Anbang’s initial bid, it put in an improved offer three days later. So whether or not Starwood accepts the latest Chinese bid, this long-running takeover saga appears far from over.
Starwood acquisition saga
16 Nov 15: Starwood accepts Marriott’s US$12.2bn bid
14 Mar 16: Anbang makes “unsolicited” US$13bn offer
18 Mar 16: Starwood accepts Anbang’s improved US$13.2bn bid
21 Mar 16: Marriott has new US$13.6bn offer accepted
28 Mar 16: Anbang comes back in with US$14.0bn offer
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