Last-Minute Counterbid for Starwood May Derail Marriott Deal

Mar 14, 2016

Starwood Hotels, the owner of such hotel brands as Sheraton, W, Le Meridien and Aloft, was all set to be purchased by Marriott International for $12.2 billion in a deal that would create the world’s largest hotel operator.

But the certainty of that acquisition was thrown into question early Monday when Starwood announced that it had received an unsolicited counter bid of $76 a share in cash from a consortium of companies.

Starwood didn't identify the consortium's backers, but The Wall Street Journal said it was being led by China's Anbang Insurance Group. There was no announcement on Anbang's website.

In a deal struck in November, Marriott was planning to buy Starwood for $72.08 per share. A simultaneous spinoff of Starwood's timeshare business and subsequent merger with Interval Leisure Group was expected to result in another $7.8o per share in value. Starwood on Monday said the spin-off and merger would result in ILG common stock valued at $5.50 per Starwood share.

The combined company—to be led by Marriott president and CEO Arne Sorenson—would feature around 1.1 million rooms in 5,500 properties in more than 100 countries. Combined pro forma fee revenue is expected to top $2.7 billion.

Starwood's board isn't changing its recommendation that shareholders accept the Marriott offer.

"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."

Under the terms of the initial Marriott offer, Starwood asked for and got permission to examine the alternative bid and entered talks with the consortium on March 11. It has until 11:59 p.m. Eastern Time to wrap up those talks.

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