Starwood accepts bid from Chinese investors over Marriott

Rumors of Starwood Hotels & Resorts being acquired have been running around for months now. First Hyatt was thought to be the most likely buyer, then IHG, until Marriott made an offer valued at $12.2 billion. The merger between Marriott and Starwood would result in the largest hotel chain in the world, managing over 5,500 properties and 1,100,000 hotels rooms in over 100 countries.

With only 2 weeks to go before shareholders vote on the merger on March 28th, Chinese company Anbang Insurance Group has come out of left field, putting in a bid for $12.8 billion, forcing the company to reconsider its previous commitment. On Monday, Starwood said that it received a waiver from Marriott to discuss the offer with the Chinese based investors, however if Starwood backs out of the deal with Marriott, it will owe them a termination fee of $400 million.

On Friday, Starwood has announced that it will indeed be backing out of its agreement with Marriott, instead accepting a deal for $13.2 billion from Anbang, citing that it was simply a better proposal. The investment group had originally offered $12.8 billion, or about $76 per share to acquire Starwood’s brands, compared to $12.2 billion from Marriott. This means that negotiations are back on the table, and Marriott has until March 28th to come up with a counteroffer against its competitor.

Anbang Insurance Group is a consortium of Chinese investors, which has been steadily acquiring hotel properties across the US. It acquired the Waldorf Astoria two years ago for $1.95 billion, and later bought Strategic Hotels & Resorts from the Blackstone Group in a deal valued at about $6.5 billion, showing that they are interested in the high end hotel market with properties such as the Fairmont Scottsdale, several Ritz-Carltons in California, the Fairmont and Intercontinental properties in Chicago, and others, totaling 17of the most high-end hotels in the US.

Marriott International has said that it “continues to believe that a combination of Marriott and Starwood is the best course for both companies” and it is “carefully considering its alternatives.” This means a potential counter-offer from the company is likely.

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