China Firm Acquires Starwood

St. Regis Saadiyat Island,  a Starwood property

A consortium led by Anbang Insurance Group in China has tentatively acquired Starwood Hotels & Resorts, although Marriott International still has an opportunity to submit another offer.

On March 14, the consortium—which also includes New York City’s J. Flowers & Co. and Beijing-based Primavera Capital Group—unexpectedly made a $13.2 billion, all-cash bid. This put in jeopardy a $12.2 million offer that Starwood accepted from Marriott International, consisting of $11.9 billion in stocks and $300 million in cash, in November. Marriott had expected to finalize the deal at the end of March, but its agreement included a $400 million breakup fee and enabled Starwood to consider other offers through March 17.

In a statement, Starwood wrote that “the Consortium’s proposal constitutes a ‘Superior Proposal’ and that Starwood’s Board intends to terminate the Marriott merger agreement and enter into a definitive agreement with the Consortium.”

Starwood was lured by Anbang’s higher, all-cash offer, and by its higher valuing of each Starwood share ($78, compared with Marriott’s $62 to $67). The Anbang deal was viewed as an opportunity to stave off job cuts, retain Starwood’s executive leadership and business strategy, and keep its brands and Starwood Preferred Guest Loyalty Program intact.

By choosing Anbang rather than Marriott, Starwood would give up the opportunity to be part of the world’s largest hotel company, however, and would lose considerable bargaining power with online travel agencies and competing hospitality companies.

Marriott has an opportunity to continue its negotiations with Starwood through March 28, and issued the following statement on Friday: “Marriott continues to believe that a combination of Marriott and Starwood is the best course for both companies and offers the best value to Starwood shareholders.  Marriott is in the process of reviewing the Anbang consortium’s proposal and is carefully considering its alternatives.”

Starwood Hotels & Resorts Worldwide, Inc., has nearly 1,300 properties in approximately 100 countries, divided among 11 distinct brands, including St. Regis, Sheraton, Westin, W and Le Meridien.

Further Reading:
China Firm Offers $13 Billion for Starwood
Marriott Purchases Starwood for $12.2 Billion

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