NEW YORK CITY: Starwood Hotels & Resorts said on Monday (Tuesday in Manila) it was weighing an improved takeover bid from a group led by Chinese insurer Anbang that trumps its agreed deal with Marriott International.
In the latest turn in the bidding war for the US hotel operator, Starwood said the consortium led by Anbang Insurance gave a non-binding offer on Saturday of $82.75 per share, an all-cash deal valued at $14 billion.
That tops US firm Marriott’s improved bid which the Starwood board is still recommending, Starwood said in a statement.
Starwood accepted Marriott’s $13.6 billion cash-and-stock takeover offer on March 21 that would create the world’s largest hotel company.
Starwood said that it had received an improved offer from Anbang on Saturday of $81 per share but that following discussions, the consortium sweetened it again, to $82.75.
Starwood said the consortium’s offer is “reasonably likely” to lead to a “superior proposal’” as defined in its merger agreement with Marriott, and it was continuing to discuss “non-price terms” with the Anbang-led group, which includes China-based Primavera Capital and US private-equity investor JC Flowers & Co.
Marriott, in a separate statement Monday, reaffirmed its commitment to the Starwood acquisition, saying it was “confident that the previously announced amended merger agreement is the best course for both companies.”
Marriott warned Starwood stockholders they should consider whether the Anbang-led consortium would 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.”
Starwood and Marriott’s shareholders meetings to consider their merger agreement on Monday were immediately adjourned until April 8.
Starwood shares closed off their highs, up almost 2.0 percent at $83.75. Marriott surged 3.9 percent to $71.34.
An Anbang acquisition of Starwood would be the largest Chinese takeover of a US company, exceeding pork producer WH Group’s purchase in 2013 of Smithfield Foods in a $7.1 billion deal.
With assets of $254 billion, the deep-pocketed Chinese insurer is on a shopping spree in the US hotel sector after scooping up the landmark Waldorf Astoria Hotel in Manhattan for nearly $2 billion in 2014.
Last week, it announced the $6.5 billion purchase of Strategic Hotels & Resorts, 16 luxury properties in the US including the JW Marriott Essex House in Manhattan and the Hotel Del Coronado in San Diego.
Hotel bids heat up
Starwood initially had agreed in November to a tie-up with Marriott, forging the world’s largest hotel chain. Marriott has more than 4,400 properties worldwide, with a portfolio of brands including The Ritz-Carlton, JW Marriott and Gaylord Hotels. Starwood has 1,270 properties.
On March, 18 Starwood announced it favored the Anbang-led group’s $78 per share offer, or $13.2 billion, improved by $2 per share.
But a week ago, it said it had accepted Marriott’s improved bid of $21 per share in cash and 0.80 shares of Marriott, or $13.6 billion, spurning Anbang.
Their agreed merger would combine Marriott’s more than 4,400 properties worldwide, with a portfolio of brands including The Ritz-Carlton, JW Marriott and Gaylord Hotels, with Starwood’s 1,270 properties in 100 countries and the Sheraton, Westin and W brands, among others.
The combination would help Marriott expand in China, India and Europe, regions where Starwood has a strong presence.
Marriott estimates the merger will yield $250 million in annual cost synergies within two years after closing, expected by mid-2016.
If Starwood backs out of the deal, it must pay Marriott a $450 million break-up fee.