Last updated: 10:06 AM ET, Wed May 11 2016

Could a Lawsuit Block the Marriott Starwood Merger?

Hotel & Resort | Patrick Clarke | May 11, 2016

Could a Lawsuit Block the Marriott Starwood Merger?

Photo courtesty of Thinkstock.

Marriott International's pending acquisition of Starwood Hotels & Resorts Worldwide already overcame one major obstacle earlier this year when a Chinese consortium led by the Anbang Insurance Group withdrew a $14 billion takeover offer for Starwood. But now the highly anticipated merger faces another potential hurdle.

Bloomberg reports a pair of hotel owners in Chicago and New York filed a suit Tuesday, arguing that a merger of the two hotel giants would violate exclusivity agreements.

More specifically, the ownership groups say Marriott's acquisition of Starwood "would violate contract clauses that prohibit Starwood from owning, franchising, operating or managing other hotels within a specific geographical area around the two hotels," according to Bloomberg.

Sheraton Grand Chicago owner Cityfront Hotel Associates Limited Partners and Westin Times Square owner Dream Team Hotel Associates LLC have sued both companies in New York state court with the goal of preventing completion of the merger, which is expected to close this summer.

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

While it remains to be seen how the suit will play out, it's been clear for some time that Marriott isn't going to acquire Starwood without a fight. The two sides originally agreed to merge in November 2015 and it was mostly smooth sailing for several months until Anbang and others swooped in with a takeover offer for Starwood. 

The ensuing bidding war between the Anbang-led consortium and Marriott nearly derailed the deal, which would form the world's largest hotel company.

If the two companies are to make history this year, it appears they'll have to break down at least one more barrier.


You may use your Facebook account to add a comment, subject to Facebook's Terms of Service and Privacy Policy. Your Facebook information, including your name, photo & any other personal data you make public on Facebook will appear with your comment, and may be used on Click here to learn more.

Sandals Resorts: The 5-Star Luxury Included Resorts

Hotels & Resorts