Starwood Announces Intent to Terminate Marriott Merger, Accept Anbang Proposal
Starwood Hotels & Resorts Worldwide today informed Marriott International that it intends to accept a binding and fully financed buyout proposal from a consortium of Anbang Insurance Group Co. Ltd., J.C. Flowers & Co. and Primavera Capital Ltd. The Starwood board of directors, in consultation with its legal and financial advisors, has determined that the Anbang deal constitutes a "superior proposal" to the existing merger agreement with Marriott.
According to a statement released today by Starwood, the consortium would acquire all of the outstanding shares of common stock of Starwood for $78 per share in cash, an increase from the $76 per-share proposal made by the consortium on March 10. Starwood stockholders would also receive consideration in the form of common stock from the previously announced spin-off of its vacation ownership business, Vistana Signature Experiences, and subsequent merger with ILG, currently valued at approximately $5.67 per Starwood share. On this basis, the consortium proposal and the ILG transaction have a current value of $83.67 per share.
Under the terms of the merger agreement with Marriott, Starwood stockholders would receive 0.92 shares of Marriott International Inc. Class A common stock and $2 in cash for each share of Starwood common stock. That merger deal has a current value of $65.33 per Starwood share, including the $2 cash per-share consideration. Starwood stockholders will separately receive consideration from the spin-off of the Starwood timeshare business and subsequent merger with ILG of approximately $5.67 per Starwood share. On that basis, the merger with Marriott and the ILG transaction have a current value of $71 per share.
Based on the terms of the Marriott merger agreement, Marriott has the right until 11:59 p.m. ET on March 28 to negotiate revisions to the existing merger agreement between Marriott and Starwood so that the proposal from the consortium no longer constitutes a "superior proposal." Starwood's statement said the company will negotiate in good faith with Marriott during this period, and the Starwood board will consider in good faith any changes to the Marriott agreement that Marriott may propose during this period.
In light of these developments, Starwood is postponing its stockholders meeting, which was scheduled to be held on March 28 -- as might Marriott, which released the following statement in response to the Anbang proposal:
"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. The company is considering postponing its Special Meeting of Stockholders which is currently scheduled for March 28, 2016. Marriott has no further public comment at this time."