Marriott Raises Bid for Starwood
Marriott International sweetened its bid for Starwood Hotels and Resorts Worldwide with more cash, greater synergies and a higher breakup fee. That still may not be enough to deter the Anbang Insurance Group of China and its co-investors from making a counteroffer — yet again.
万豪国际(Marriott International)提高对喜达屋酒店及度假村国际集团(Starwood Hotels& Resorts Worldwide)的报价，增加了现金支付额、提出了更深入的协同计划并调高了违约金。但这可能还是不足以阻止中国安邦保险集团及其共同投资人再次提价。
Anbang, with the New York private equity firm J. C. Flowers and the China-based Primavera Capital, swooped in with a bid for Starwood last week, as the hotel operator was finishing the deal it signed with Marriott in November. That set Marriott in motion, with a new offer disclosed on Monday.
就在喜达屋与万豪去年11月签署的协议即将完成之际，安邦与纽约私募股权公司J.C.Flowers，以及总部位于中国的春华资本集团(Primavera Capital Group)组成的财团上周提出竞购喜达屋。这促使了万豪国际采取行动，在周一公布了新要约。
“The proposal we signed last night is not as good for us as the deal we signed and announced in November,” said Arne Sorenson, president and chief executive of Marriott, in an interview with CNBC on Monday. “The deal we got in November, in retrospect, maybe was just too good a deal.”
Starwood deemed Marriott’s new proposal as superior to the one brought last week by a consortium led by Anbang. Shareholders would receive $21 a share in cash and 0.80 share of Marriott for each share of Starwood, valuing Starwood at $79.53 a share, or $13.6 billion, as of the market close on Friday.
In the agreement that Marriott reached with Starwood in November, Starwood shareholders were to receive 0.92 share of Marriott stock as well as $2 in cash a share. Based on Friday’s close, that initial offer would have been worth $11.7 billion, or 16 percent lower.
Last week’s offer by the Chinese consortium of $78 a share, would be worth about $13.2 billion.
Marriott’s proposed deal may not be on the table for long. The Chinese insurer and its co-investors may come back with another offer, analysts say, as they seek to diversify outside of China by buying assets in the United States. Morningstar said Anbang and its private equity partners would have to offer around $86 a share to be competitive with Marriott’s latest proposal.
The structure of the new bid does not do much to deter a rival suitor, analysts said. Starwood agreed to increase the value of the breakup fee payable to Marriott to only $450 million from the $400 million from the original agreement. Starwood also agreed to reimburse Marriott for its financing-related costs, up to $18 million.
“The breakup fee leaves the door open,” said Dan Wasiolek, an analyst at Morningstar, in a phone interview. “Starwood, that’s what they have to do on behalf of their shareholders, is leave the door open the best they can until the process is complete.”
On CNBC, Mr. Sorenson said that he did not tell Starwood that Monday’s offer was the final one. But Marriott does not have much room to stretch.
It is unable to offer much more cash because it wants to keep its investment-grade rating, said Mr. Wasiolek of Morningstar. It can increase its bid a little bit, but it is going to have to come from equity, he said. This is close to the final offer, he said.
“We’re in overtime in the March Madness competition here for the Starwood title, with a minute or two left on the clock,” Mr. Wasiolek said.
A representative for the Chinese consortium declined to comment on Marriott’s revised bid.
A combination of Marriott and Starwood, whose brands include Westin and Sheraton, would create the largest hotel company in the world, with more than 5,500 owned or franchised hotels and 1.1 million rooms around the world. The deal is expected to be neutral to adjusted earnings per share in 2017 and 2018.
Over the weekend, Starwood signed up to manage two hotels in Cuba, becoming the first American company to do so in more 50 years. Mr. Sorenson was also in Cuba on Monday, alongside President Obama on his historic visit. It was there that he took the conference call with analysts to discuss the deal on Monday, and was met with a unique set of technical difficulties, as the line kept cutting out.