Following Starwood Hotels & Resorts Worldwide's announcement last week that it was terminating its purchase agreement with Marriott International for a superior bid from China's Anbang Insurance Group, Starwood and Marriott have renegotiated terms and signed a new purchase agreement. The new deal increases the cash payout to Starwood shareholders by $21 to $79.53 per share, making the new agreement worth $13.6 billion; adding in proceeds from a spin-off deal for Starwood's timeshare business, and the total for the transaction reaches $14.4 billion.
The consortium led by Anbang had offered to buy all of the outstanding shares of Starwood's common stock for $78 per share.
"After five months of extensive due diligence and joint integration planning with Starwood, including a careful analysis of the brand architecture and future development prospects, we are even more excited about the power of the combined companies and the upside growth opportunities," said Arne Sorenson, president and CEO of Marriott International. "We are also more confident of achieving our updated target of $250 million of cost synergies. With a higher cash component in the purchase price, we have improved the transaction's financial structure as well."
Sorenson added that Marriott intends to accelerate the growth of Starwood's brands, saying, "The company will have a broader global footprint and the most powerful frequent-traveler programs in the industry, strengthening Marriott's ability to serve guests wherever they travel."
Bruce Duncan, chairman of Starwood's board of directors, said, "We are pleased that Marriott has recognized the value that Starwood brings to this merger and enhanced the consideration being paid to Starwood shareholders. We continue to be excited about the combination of Starwood and Marriott, which will create the world's largest hotel company with an unparalleled platform for global growth in the upscale segment. We are also pleased with the progress the two companies have made toward closing."
Duncan also said the Starwood board has been focused on maximizing value for the shareholders, noting that Marriott's revised offer will give them great value through its long-term potential and upfront cash consideration.
Marriott expects the transaction to be roughly neutral to adjusted earnings per share in 2017 and 2018. Assuming receipt of the necessary approvals, the parties expect the transaction to close by midyear.