The past few weeks we’ve seen a fierce battle for control of Starwood, as Marriott and Anbang have been bidding against one another:
- Last November, Marriott agreed to purchase Starwood, with each share of Starwood stock being worth 0.92 Marriott shares plus $2 in cash
- Then in March, Chinese insurance group Anbang made an offer of $78 in cash per share, which Starwood accepted
- Then days later, Marriott made an offer which Starwood accepted, where each share of Starwood stock was worth 0.8 Marriott shares plus $21 in cash
- Then this Monday, Chinese insurance group Anbang made an offer of $82.75 in cash; while it wasn’t immediately accepted, Starwood’s Board of Directors indicated it was “reasonably likely to lead to a superior proposal”
As I recently explained, Anbang is a mysterious company, so they are a bit of a wild card. We don’t know what Starwood would look like under their ownership, though I’ve still been in favor of that over a Marriott merger:
- We’ve seen what consolidation has done to the airline industry, and we don’t want to see the same happen to the hotel industry; a merger between Marriott and Starwood would eliminate a competitor, and competition is good for consumers
- Based on what we know, it seems like Anbang is simply trying to diversify and globalize their investments, so they very well may let Starwood still run pretty independently
- This could be either a good or bad thing, but if anything Anbang might have lower expectations of ROI than a publicly traded company in the US, given that it sure seems like they’re about diversifying their investments rather than simply getting the highest return possible
Well, unfortunately it looks like our hope of Anbang taking over Starwood won’t become a reality, as Anbang has withdrawn their offer for Starwood. Here’s a statement from Anbang, per CNBC:
“We were attracted to the opportunity presented by Starwood because of its high-quality, leading global hotel brands, which met many of our acquisition criteria, including the ability to generate consistent, long-term returns over time,” the consortium said. “However, due to various market considerations, the consortium has determined not to proceed further. We thank the Starwood board, management team and its advisors for their efforts and support throughout this process.”
Shares of both Marriott and Starwood stock fell today, which reflects how investors seem to feel about the news.
In theory another company could still try to beat Marriott’s offer in the coming days, though it seems unlikely.
Oh well, what can ya do? It has been fun to watch, at least.