Starwood Hotels & Resorts Worldwide, Inc. has again pressed pause on its merger with Marriott International after receiving a revised, non-binding proposal from the Anbang Insurance Group-led Consortium. The new Consortium bid would see Starwood stockholders earn $3.30 USD more per share than they would under the revised Marriott bid, announced on March 21, 2016.
On March 26th, Starwood received a non-binding proposal from the Consortium under which all of its common shares would be acquired for $81.00 USD per share. In consultation with its legal and financial advisors, determined that the new bid from the Consortium (Anbang, J.C. Flowers & Co. and Primavera Capital Limited) is “likely to lead to a ‘Superior Proposal’ as defined in Starwood’s merger agreement with Marriott International.”
As a result, the company was allowed to engage in discussions with, and provide diligence information to, the Consortium in connection with the proposal.
In the discussions on March 26th, the Consortium made a revised proposal with an increased purchase price of $82.75 in cash per share of Starwood common stock.
As of March 28th, Starwood and the Consortium were continuing to discuss non-price terms related to the revised proposal, and were working to finalize the other terms of a binding proposal from the Consortium, including definitive documentation.
In a release issued on the 28th, Starwood stated that its “Board of Directors would carefully consider the outcome of its discussions with the Consortium in order to determine the course of action that is in the best interest of Starwood and its stockholders.”
It also said “there can be no assurance that discussions will result in a binding proposal from the Consortium, that the Starwood Board will determine that any such proposal is a ‘Superior Proposal’ or that a transaction with the Consortium will be approved or consummated on any particular terms or at all.”
Starwood held its stockholder meeting to consider the merger with Marriott on March 28, 2016 as planned. However, it immediately adjourned the meeting until April 8, 2016. The Starwood Board has not announced any change to its recommendation in support of the merger with Marriott.
For its part, Marriott issued a release the same day reaffirming its commitment to acquire Starwood and expressing confidence that its previously announced amended merger agreement is the best course of action for both companies.
REVISED CONSORTIUM BID
Under the terms of the revised bid, the Consortium would acquire all outstanding shares of common stock of Starwood for $82.75 USD per share in cash—an increase of $4.75 per share from its March 18th proposal.
Separate agreements would see Starwood stockholders receive additional consideration in the form of Interval Leisure Group (ILG) common stock from the spin-off of its vacation ownership business, Vistana Signature Experiences, and subsequent merger with ILG, currently valued at $5.91 per Starwood share, based on ILG’s share price as of market close on March 24, 2016.
On this basis, the Consortium proposal and ILG transaction have a combined current value of $88.66 per share. The revised Marriott bid (March 21) would see stockholders earn $85.36 (bid plus ILG transaction).