Skift Take
As we've noted before, Starwood is Marriott's to lose. Now that Anbang has upped the ante, we have to see just how much Marriott is willing to spend to keep it, or if it's willing to let Starwood run into the arms of Anbang and company.
If you're Marriott International CEO Arne Sorenson, you have to imagine this is going to be a busy week filled with a lot of closed-door meetings. At stake is whether or not his company can hold onto its already tenuous acquisition of Starwood Hotels & Resorts after a new, more attractive all-cash bid came in, yet again, from Anbang Insurance Group and its consortium.
This time, Anbang and its investor group made up of J.C. Flowers & Co. and Primavera Capital Ltd., are offering $13.8 billion, or $82.75 per share, in cash for Starwood. At the moment, this deal is currently non-binding and not yet fully financed, but both Starwood and Anbang are actively engaged in conversations to work out all the details.
This new bid is just one of many overtures (six, to be exact) that Anbang has made to Starwood over the course of nearly a year, as far back as May 2015. And if Anbang's long pursuit of Starwood has shown us anything, it's that Anbang is doggedly determined to do all it can to acquire it. The fact that Anbang outbid themselves this weekend — upping their offer from $81 per share to $82.75 per share — is also a clear sign that they are serious about buying Starwood.
"I think that was done to send a message out," said Wes Golladay, a research analyst with RBC Capital Markets. "The fact they're willing to pay up for this asset tells you how eager they are. You just don't see that too often."
Currently, Marriott says it is committed to seeing this deal through, and it issued a release on March 28, saying: "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."
So now, we have to wonder: What will Marriott do? What can it do to keep Starwood? Should it still even try? If Starwood chooses Anbang over Marriott, with that deal actually go through?
Here are a few scenarios:
Marriott Could Sweeten Its Offer
As far back as November, the problem with Marriott's offer to buy Starwood has been this: too much stock, too little cash. The original offer that Marriott and Starwood agreed upon was estimated at $12.2 billion. Under this agreement, Starwood stockholders would receive 0.92 shares of Marriott common stock, plus $2 for each share of Starwood common stock.
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