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Starwood accepts Marriott’s counter-offer, deal expected to close mid-year

Starwood accepts Marriott’s counter-offer, deal expected to close mid-year

Monday, March 21, 2016

BETHESDA, MD and STAMFORD, CT — Just days after calling off a buyout agreement with Marriott International in favour of an offer made by a Chinese consortium, Starwood Hotels & Resorts has ping-ponged back to Marriott, accepting the company’s counter-offer worth US$13.6 billion.

The deal, which was made over the weekend, outdid a rival offer of $13.2 billion in cash made by a group of investors led by Anbang Insurance Group last week. Starwood had announced last Friday that it had accepted the group’s offer and would be terminating the Marriott merger agreement. Marriot, which had until March 28 to revise its existing agreement, didn’t waste any time making a new offer and its efforts certainly paid off.

Under the terms of the amended merger agreement, Starwood shareholders will receive $21.00 in cash and 0.80 shares of Marriott International, Inc. Class A common stock for each share of Starwood Hotels & Resorts Worldwide, Inc. common stock. This values Starwood at approximately $13.6 billion, or $79.53 per share. Starwood shareholders will own approximately 34% of the combined company’s common stock after completion of the merger.

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This revised agreement, which essentially creates the world’s largest hotel company, offers superior value for Starwood’s shareholders as well as the ability to close quickly. Both companies have already obtained important regulatory consents necessary to complete the transaction, including clearing pre-merger antitrust reviews in the U.S. and Canada.

“We are pleased that Marriott has recognized the value that Starwood brings to this merger and enhanced the consideration being paid to Starwood shareholders. We continue to be excited about the combination of Starwood and Marriott, which will create the world’s largest hotel company with an unparalleled platform for global growth in the upscale segment,” said Bruce Duncan, Chairman of the Board of Directors of Starwood Hotels & Resorts Worldwide.

The transaction is subject to Marriott International and Starwood Hotels & Resorts Worldwide stockholder approvals, completion of Starwood’s planned disposition of its timeshare business, obtaining remaining regulatory approvals and the satisfaction of other customary closing conditions. Marriott and Starwood have each agreed to convene its respective stockholder meeting to consider the transactions contemplated by the amended merger agreement on March 28, 2016 and to immediately adjourn such meeting until April 8, 2016.

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Assuming that all goes well and the necessary approvals are received, it can be expected that the transaction will close in mid-2016.

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