Starwood Hotels and Resorts Worldwide have accepted a revised offer to merge with Marriott International after Chinese giant, Anbang threatened to shake-up the existing merger deal.
Marriott raised its bid for Starwood from $65.33 a share to $79.53 a share, greater than Anbang’s offer of $78 a share. Starwood shareholders will receive $21 cash and 0.8 shares of Marriott Class A common stock for each share of Starwood common stock.Marriott International, and Starwood Hotels and Resorts Worldwide, have now signed an amendment to their definitive merger agreement that creates the world’s largest hotel company.
In addition, Starwood stockholders are expected to receive separate consideration in the form of Interval Leisure Group ommon stock from the spin-off of the Starwood timeshare business and subsequent merger with ILG, currently valued at $5.83 per Starwood share, based on ILG’s share price as of market close on March 18, 2016 (the “ILG transaction”). Both companies continue to expect the closing of this transaction will occur well before the planned date of the Marriott-Starwood merger closing. The amended agreement and the ILG transaction have a combined current value of $85.36 per share of Starwood common stock.
Arne Sorenson, president and chief executive officer of Marriott International, said: “After five months of extensive due diligence and joint integration planning with Starwood, including a careful analysis of the brand architecture and future development prospects, we are even more excited about the power of the combined companies and the upside growth opportunities. We are also more confident of achieving our updated target of $250 million of cost synergies. With a higher cash component in the purchase price, we have improved the transaction’s financial structure as well.
“We expect to accelerate the growth of Starwood’s brands, leveraging Marriott’s worldwide hotel development organization and owner and franchisee relationships. On the top line, combined sales expertise and increased account coverage should drive additional customer loyalty and increase revenue. Hotel level cost savings should benefit owners and franchisees, including better efficiencies in reservations, procurement and shared services. The company will have a broader global footprint and the most powerful frequent traveler programs in the industry, strengthening Marriott’s ability to serve guests wherever they travel.
“We are also bringing together two of the most talented and experienced teams in the industry. Together, they will combine their innovative ideas and service commitment to deliver unforgettable guest experiences.”
Bruce Duncan, chairman of the board of directors of Starwood Hotels & Resorts Worldwide, said, “We are pleased that Marriott has recognized the value that Starwood brings to this merger and enhanced the consideration being paid to Starwood shareholders. We continue to be excited about the combination of Starwood and Marriott, which will create the world’s largest hotel company with an unparalleled platform for global growth in the upscale segment. We are also pleased with the progress the two companies have made toward closing.
“Throughout this process, our board of directors has remained laser-focused on maximising value for Starwood shareholders, and Marriott’s revised offer provides the highest value to our shareholders through long-term upside potential from shared synergies and ownership in one of the world’s most respected companies, as well as significant upfront cash consideration.