Starwood Hotels & Resorts Worldwide made an announcement this morning that they had received a competing non-binding takeover bid on March 10, 2016, from “consortium”.
The offer would be $76 in all cash compared to stock + cash offer from Marriott that is currently valued at $63.74. Starwood has commenced negotiations with this consortium on March 11 and they have waiver from Marriott until March 17.
EDIT: Press release that Marriott released after Starwood one indicates that the consortium is lead by Chinese insurance company.
Here’s the release from Starwood:
STAMFORD, Conn.–(BUSINESS WIRE)– Starwood Hotels & Resorts Worldwide, Inc. (NYSE:HOT) (“Starwood”) today announced that on March 10, 2016 it received a non-binding proposal from a consortium of companies (the “Consortium”) to acquire all of the outstanding shares of common stock of Starwood for $76.00 per share in cash. Pursuant to separate agreements entered into by Starwood, stockholders would additionally receive consideration in the form of Interval Leisure Group (“ILG”) common stock from the previously announced spin-off of its vacation ownership business, Vistana Signature Experiences, and subsequent merger with ILG, currently valued at approximately $5.50 per Starwood share, based on the 20-day VWAP (volume weighted average price) of ILG common stock ending March 11, 2016.
As announced on November 16, 2015, Starwood entered into a definitive merger agreement with Marriott International, Inc. (NASDAQ: MAR) (“Marriott”) under which Marriott would acquire Starwood in a stock and cash transaction. Starwood has received a waiver from Marriott enabling it to engage in discussions with, and provide diligence information to, the Consortium in connection with its proposal. Starwood commenced discussions with the Consortium on March 11, 2016. The Marriott waiver expires at 11:59 pm Eastern Time on March 17, 2016.
Starwood’s Board of Directors has not changed its recommendation in support of Starwood’s merger with Marriott. The Board, in consultation with its legal and financial advisors, will carefully consider the outcome of its discussions with the Consortium in order to determine the course of action that is in the best interest of Starwood and its stockholders. The Consortium has not completed diligence and there are a number of matters to be resolved in the Consortium’s proposal. There can be no assurance that discussions will result in a binding proposal from the Consortium or that a transaction with the Consortium will be approved or consummated. Starwood does not intend to comment further on its discussions with the Consortium prior to the expiration of the waiver period.
Under the terms of the merger agreement with Marriott, at closing, Starwood stockholders would receive 0.92 shares of Marriott International, Inc. Class A common stock and $2.00 in cash for each share of Starwood common stock. The total consideration to be paid by Marriott, excluding debt assumed, totals $10.8 billion, consisting of $10.5 billion of Marriott common stock, based on the 20-day VWAP of Marriott common stock ending on March 11, 2016, and $339 million of cash, based on approximately 170 million fully diluted Starwood shares outstanding at February 19, 2016. Based on Marriott’s 20-day VWAP ending March 11, 2016, the merger transaction has a current value of $63.74 per Starwood share, including the $2.00 cash per share consideration. Starwood stockholders will separately receive consideration from the spin-off of the Starwood timeshare business and subsequent merger with ILG of approximately $5.50 per Starwood share, based on the 20-day VWAP of ILG common stock ending March 11, 2016.
Lazard and Citigroup Global Markets Inc. are serving as financial advisors and Cravath, Swaine & Moore LLP is serving as legal counsel to Starwood.
Here’s the release from Marriott:
On March 11, 2016 Starwood notified Marriott that it had received an unsolicited indication of interest in purchasing Starwood from a consortium of potential investors, led by Anbang Insurance Group. Marriott notes that this unsolicited indication of interest is highly conditional and non-binding. Marriott granted Starwood a waiver to expedite its evaluation of the letter from the interested consortium.
Marriott will monitor this development as it and Starwood continue to work toward the closing of its transaction and the successful integration of the two companies in anticipation of votes by each company’s stockholders on March 28, 2016.
Starwood stated today that its Board of Directors has not changed its recommendation in support of Starwood’s merger with Marriott. Starwood has said that its Board, in consultation with its legal and financial advisors, will carefully consider the outcome of its discussions with the consortium in order to determine the course of action that it determines is in the best interest of Starwood and its stockholders.
It is interesting that Starwood doesn’t name what this “consortium” is that made the competing bid.
The Chinese company that purchased the Waldorf Astoria the other year for close to $2B made a purchase of Strategic Hotels & Resort from Blackstone for $6.5B last week. This sale consists number of Four Seasons hotels and JW Essex House in New York and InterContinental hotels in Chicago and Miami.
May be there is another Chinese bidder that is willing to pay cash to purchase Starwood?
I still believe that the Marriott purchase of Starwood would be a disaster for SPG loyalty program members. Interesting to see what will come out from this competing bid.
EDIT: The Marriott’s press release indicates that the consortium is lead by the same company that I referenced above that purchased the Strategic Hotels & Resorts over the weekend.