The deal for Anbang — instead of Marriott — to acquire Starwood – may be back on.
Anbang’s consortium, which includes private equity firms J.C. Flowers & Co and Primavera Capital Ltd, had offered $82.75 per share in cash, in what is reasonably likely to lead to a proposal that is superior to the deal with Marriott, Starwood said on Monday.
..Marriott’s latest cash-and-stock offer, which was announced on March 21, is currently worth around $78 per share. Starwood’s board has not yet changed its recommendation to its shareholders in support of the company’s merger with Marriott, Starwood said.
- The new ‘superior’ offer was already worth less than the earlier Anbang offer with the slide in Marriott’s share price. While it doesn’t make sense to project out the lower value to the date of closing, it underscored how non-obviously better Marriott’s deal was in the first place.
- Anbang had made a higher offer earlier in the negotiations and might be willing to do so again.
- Starwood pushed back on Marriott’s request for an even larger breakup fee in the revised deal, suggesting they were trying to leave open the possibility of a new higher offer.
Starwood was being shopped aggressively for over 6 months, and Marriott wound up the high bidder in the eyes of the Starwood board. There was interest from Hyatt. Possible interest from IHG and Wyndham.
Just over a week ago Starwood’s customers and shareholders were excited by a Chinese group led by insurer Anbang making a substantially higher offer for the hotel chain than the pending Marriott Marriott acquisition deal.
Then last Monday Marriott increased their offer substantially to take the lead in the acquisition of Starwood. Marriott’s offer is 0.8 Marriott shares and $21 in cash for each Starwood share. A shareholder vote was scheduled for April 8.
Al Maha Desert Resort
Now Anbang’s new offer is $82.75 per share, not including Starwood’s timeshare business. They’re working to finalize ‘non-price’ details of the agreement. Last time the amount of Marriott’s breakup fee to be paid by the acquirer was an issue, and Anbang ultimately agreed to cover half. No doubt Starwood’s officers are interested in the size of their golden parachutes under the deal (the amount of which grew from the first Marriott offer to the second). Although I’m sure they’re also working through guarantees of financing and breakup fees as well.
Marriott could still counter. I was surprised they upped their last offer by about $1.5 billion, after previously having been the accepted bidder for Starwood. Would Marriott go even further? Though I didn’t think they would match last time, it seems even more likely that they’d call themselves done and pocket $450 million in breakup fees and up to $18 million in expenses rather than arguably overpaying. Marriott has historically been a conservative company, and Marriott’s CEO even previously said he didn’t want to do a Starwood-type deal.