The drama over the acquirer of the Starwood Hotels & Resorts continues. The Anbang consortium made a new counter-bid to Marriott’s upped one and Starwood is now considering it the “Superior Proposal”.
Both Marriott and Starwood shareholders are supposed to now vote on April 8, 2016, and determine what the outcome will be. There could always be richer proposal from Marriott.
Here’s the Starwood’s press release:
STAMFORD, Conn.–(BUSINESS WIRE)– Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) (“Starwood”) today announced that its Board of Directors, in consultation with its legal and financial advisors, determined that a revised, non-binding proposal from a consortium consisting of Anbang Insurance Group Co., Ltd., J.C. Flowers & Co. and Primavera Capital Limited (the “Consortium”) is reasonably likely to lead to a “Superior Proposal” as defined in Starwood’s merger agreement with Marriott International, Inc. (NASDAQ: MAR) (“Marriott”).
On March 26, 2016, Starwood received a non-binding proposal from the Consortium, under which the Consortium would acquire all of the outstanding shares of Starwood common stock for $81.00 per share in cash. Starwood’s Board, in consultation with its legal and financial advisors, determined that this proposal is reasonably likely to lead to a “Superior Proposal,” allowing Starwood 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 26, 2016 and, in those discussions, the Consortium made a revised proposal with an increased purchase price of $82.75 in cash per share of Starwood common stock. Starwood and the Consortium are continuing to discuss non-price terms related to the Consortium’s revised proposal, and are working to finalize the other terms of a binding proposal from the Consortium, including definitive documentation.
The Starwood 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. There can be no assurance that discussions will result in a binding proposal from the Consortium, that the Starwood Board will determine that any such proposal is a “Superior Proposal” or that a transaction with the Consortium will be approved or consummated on any particular terms or at all.
Under the terms of the Consortium’s current, revised proposal, the Consortium would acquire all of the outstanding shares of common stock of Starwood for $82.75 per share in cash, an increase of $4.75 per share from the Consortium’s prior binding proposal on March 18, 2016. Pursuant to separate agreements previously entered into by Starwood, Starwood stockholders would receive additional consideration in the form of Interval Leisure Group (NASDAQ: IILG) (“ILG”) common stock from the spin-off of its vacation ownership business, Vistana Signature Experiences, and subsequent merger with ILG, currently valued at $5.91 per Starwood share, based on ILG’s share price as of market close on March 24, 2016 (the “ILG Transaction”). On this basis, the Consortium proposal and the ILG transaction have a combined current value of $88.66 per share.
As previously announced, Starwood intends to convene its stockholder meeting to consider the merger with Marriott on March 28, 2016, and immediately adjourn the meeting until April 8, 2016. Starwood’s Board has not changed its recommendation in support of Starwood’s merger with Marriott.
And here’s new one from Marriott:
Bethesda, Md., March 28, 2016 – Marriott International, Inc. (NASDAQ: MAR) today reaffirmed its commitment to acquire Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT), confident that the previously announced amended merger agreement is the best course for both companies. 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.
On March 26, 2016, Starwood notified Marriott that it had received an updated unsolicited proposal from a consortium of potential investors, led by Anbang Insurance Group, which its Board is considering. 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 April 8, 2016. Starwood stated today that its Board of Directors has not changed its recommendation in support of Starwood’s merger with Marriott. 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.
The new unsolicited proposal by the Anbang consortium follows a March 21, 2016 announcement by Marriott International and Starwood that the companies had signed an amendment to their definitive merger agreement. Under the terms of that amended merger agreement, Starwood shareholders will receive $21.00 in cash and 0.80 shares of Marriott International, Inc. Class A common stock for each share of Starwood Hotels & Resorts Worldwide, Inc. common stock. Starwood shareholders will own approximately 34 percent of the combined company’s common stock after completion of the merger, based on current shares outstanding.
On March 25, 2016, Starwood and Marriott filed 8-Ks with the Securities and Exchange Commission (SEC) noting that Starwood’s financial advisors have provided analysis that recognizes that in addition to the $21.00 per share cash portion of the amended Marriott – Starwood agreement, the stock consideration offers a superior long-term value for Starwood stockholders. The advisors’ provided the company with opinions, available to all Starwood stockholders and attached to the 8-Ks, that noted the value range for Marriott on a standalone basis, before giving effect to the merger, is between $92.35 to $103.46 per share utilizing a discounted cash flow analysis for Marriott stock based upon the newly updated adjusted forecasts. Stockholders should review the 8-Ks in their entirety. The foregoing excerpt from the opinion of Starwood’s financial advisors is only part of such advisors’ analysis and is subject to a number of assumptions, qualifications and limitations which are described in detail in the 8-Ks.
Marriott International will have no additional comment until further developments occur.
The Anbang lead offer is richer and in all cash compared to the part stock + part cash offer from Marriott.
If the Starwood investors wish to invest into Marriott stock, they are free to do so with the proceedings received from the all cash purchase. It is certainly interesting to see whether Marriott will up their offer for the second time.
As I have posted previously, I don’t see anything positive coming to SPG members if any Marriott bid succeeds.