Update On Starwood’s Chinese Takeover Bid?

On Monday we learned about an interesting development regarding the Marriott and Starwood merger, where a Chinese investor group has submitted an offer to acquire all outstanding shares of Starwood common stock for $76 per share.

While the merger with Marriott is well underway, Starwood has a waiver which allows them to entertain other offers for the time being. They have the obligation of exploring those offers and maximizing shareholder value.

Marriott-Starwood-Merger

While this bid from the Chinese investor group is structured differently than the merger between Marriott and Starwood, on the surface it’s a better deal for shareholders. Marriott’s offer is a combination of cash and stock, where owners of Starwood stock would receive 0.92 Marriott shares plus $2 in cash for each held Starwood share.

We don’t know what exactly that will amount to when the deal closes, but it’s unlikely to get Starwood more than $76 per share.

The reason for this post is that Starwood has a waiver from Marriott to explore the offer further, valid through Thursday, March 17, 2016, which was yesterday. Per Reuters:

Starwood has said it received a waiver from Marriott that allows it to engage in discussions with Anbang and its consortium. The waiver expires at midnight on Thursday but could be extended.

We still haven’t heard anything from Marriott or Starwood, so I’m very curious to see what happens here.

The company which has made the bid for Starwood has hired proxy solicitors to rally Starwood shareholders. Clearly they’re serious about the offer (as I’d hope they are when looking to drop billions of dollars), and it’ll be telling to see how far they try to take things if Starwood tries to reject the offer. Per Reuters:

Anbang has hired proxy solicitation firm Georgeson Inc, which has already started to contact Starwood shareholders, the sources said. Anbang will decide on its next move based on Starwood’s response to its offer, the sources said.

I can’t imagine Starwood can in good conscience walk away from a $76 per share all cash offer without at least pursuing it further. If they do enter further discussions, I’m curious if Marriott will end up increasing their bid, or whether we may see interest from yet another party.

Either way, I have my popcorn ready! Hopefully we get a further update today.

I’m still cautiously rooting for this takeover bid to work. Consolidation is almost never good for consumers, and if this is successful there’s a decent chance we won’t see too many changes to Starwood. But there are also a lot of unknowns, while with Marriott we at least know what to expect.

Do you think Starwood will pursue Anbang’s offer further? Are you on #TeamAnbang or #TeamMarriott?

Comments

  1. Maybe I spoke too soon. Didn’t see this nasty little detail — “Sources told CNBC that Marriott will in fact make a counter-bid. ” Boo!

  2. @ Gene — While that’s true, I wouldn’t be surprised if the Chinese investors have deeper pockets than Marriott… or at least are willing to overpay more.

  3. @ Ben — Couldn’t agree more. Hey, they can just manipulate their currency. 😉 As I’ve said before, they better hurry and close before January 20, 2017!

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