The bidding war to acquire Starwood Hotels intensified after Chinese insurer Anbang raised its offer on Monday, March 28. The new offer is likely to threaten Marriott’s merger plan with Starwood.
Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) announced on Monday that it received a revised nonbinding offer from the consortium led by Anbang Insurance Group. The offer is likely to lead to a superior proposal and allow Starwood to engage in discussions with the consortium, according to the company’s press release.
The consortium revised its bid to $82.75 per share in cash, an increase from the $78 per share proposal made on March 18. This tops Marriott’s latest bid on March 21, which was valued at $79.53 (in cash and stock).
Anbang’s new offer raised the value of Starwood to $14 billion, Marriott’s offer was $13.6 billion.
Marriott International, Inc.(NASDAQ: MAR) reaffirmed its commitment to acquire Starwood on Monday and stated, “The combined company will offer stockholders significant equity upside and greater long-term value driven by a larger global footprint, wider choice of brands for consumers, substantial revenue synergies, and improved economics to owners and franchisees leading to accelerated global growth and continued strong returns.”
In its statement, Marriott also questioned Anbang’s ability to finance the transaction and get the necessary regulatory approvals:
“Starwood stockholders should give serious consideration to the question of whether the Anbang-led consortium will be able to close the proposed transaction, with a particular focus on the certainty of the consortium’s financing and the timing of any required regulatory approvals.”
Starwood, the owner of St. Regis, W, Westin, and Sheraton brands, will have to pay Marriott $450 million to break up the merger arrangement.
Both Marriott and Starwood announced they had agreed to merge in a cash and stock deal that would value Starwood at $12.2 billion last November. Both companies signed an amended merger agreement after Mariott sweetened its bid for Starwood on March 21, valuing the company at $13.6 billion.
The merger, if it still goes through, would create the world’s largest hotel company. Marriott is confident it can achieve $250 million in annual cost synergies within two years after closing the Starwood deal.
After the news on Monday, shares of Starwood rose 2 percent, to $83.78. And shares of Marriott rose 3.93 percent, to $71.34.
