Last updated: 11:18 AM ET, Fri March 18 2016

Could A Chinese Takeover Bid Derail The Starwood Marriott Merger?

Hotel & Resort | Patrick Clarke | March 18, 2016

Could A Chinese Takeover Bid Derail The Starwood Marriott Merger?

The impending acquisition of Starwood Hotels & Resorts Worldwide took another twist Friday when the company revealed the latest $13 billion-plus takeover offer from a Chinese consortium led by the Anbang Insurance Group to be a "superior proposal" to its current merger agreement with Marriott International.

Starwood confirmed the offer would value the Stamford, Connecticut-based company at more than $13 billion, paying out $78 per share, an increase over the consortium's original offer on March 10.

In addition to Starwood common stock, the company said stockholders would receive stock in the Interval Leisure Group — which has agreed to purchase Starwood's vacation ownership business — valued at approximately $5.67 per Starwood share, bringing the offer value to $83.67 per share.

Meanwhile, the current offer from Marriott boasts a value of just $71.00 per share.

READ MORE: Winners, Losers of Marriott's $12.2 Billion Acquisition of Starwood

Starwood has informed Marriott that it intends to terminate its merger agreement and move forward with the consortium's offer. However Marriott has until 11:59 p.m. ET on March 28, 2016 to propose a new offer that could potentially trump the consortium's.

If Starwood's board of directors still considers the consortium's proposal to be superior to Marriott's at the conclusion of the negotiating period, it can then terminate its merger agreement and enter into a definitive agreement with the consortium.

If the Marriott merger agreement is terminated, though, the company will be owed a $400 million termination fee. 

READ MORE: INFOGRAPHIC: Starwood Achieves Record Growth in 2015

In the meantime the company has postponed its special stockholders meeting scheduled for March 28. Marriott said it's considering postponing its meeting as well.

If the consortium's bid is ultimately accepted, it will signal the largest-ever acquistion of a U.S. company by a China-based investor. It would also conclude a whirlwind month for Anbang, which just recently agreed to purchase Strategic Hotels & Resorts from the Blackstone Group in a deal valued at $6.5 billion.

The move comes a little more than one year after the group purchased the iconic Waldorf Astoria New York from Hilton Worldwide for nearly $2 billion.

The consortium includes private equity firms J.C. Flowers & Co and Primavera Capital Ltd.


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