Anbang-Led Consortium Withdraws Starwood Offer, Marriott Merger Back on Track
Image courtesy of Marriott International
Starwood Hotels & Resorts Worldwide announced Thursday that a consortium led by China's Anbang Insurance Group has withdrawn its $14 billion non-binding acquisition proposal, citing market conditions.
What's more, the consortium, which also comprises J.C. Flowers & Co. and Primavera Capital Limited, informed Starwood that it does not plan to present another offer.
With the consortium's offer officially off the table, Starwood has indicated that it plans to move forward with the amended Marriott International merger it agreed to last month.
A Marriott-Starwood merger, which is expected to close in mid-2016, would form the world's largest hotel company.
Under the terms of the current merger agreement, Starwood shareholders would receive $21 in cash as well as 0.80 shares of Marriott Class A common stock for each share of Starwood common stock. Based on current shares outstanding, Starwood shareholders will own approximately one-third (34 percent) of the combined company's common stock after the merger is completed.
"The existing merger agreement provides substantial value to our stockholders through significant upfront cash consideration and long-term upside potential from projected shared synergies, including $250 million in cost synergies and significant revenue synergies, as well as ownership in one of the world’s most respected companies," said Starwood CEO Thomas Mangas in a statement.
In his own statement, Marriott president and CEO Arne Sorenson said "we are focused on maximizing shareholder value and from the beginning of this process we have been steadfast in our belief that a combination with Starwood will offer the highest value to all shareholders."
In wake of the consortium's withdrawal, both Marriott and Starwood are encouraging their respective shareholders to vote in favor of the proposed merger. Currently, the two companies' shareholder meetings are scheduled for 10 a.m. ET April 8.
While Starwood is clearly the big winner to emerge from this past month's bidding war between Marriott and the Anbang-led consortium as it secured a better deal than it had originally agreed to back in November 2015, Thursday's news is also huge for Marriott as the company is once again in the driver's seat to form the world's largest hotel company later this year.
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