Marriott stands by their offer despite the unsolicited bid.
Hang on to to your hats. It should be an interesting couple of weeks.
Very interesting, a cash rich Chinese insurance company now musing an offer of 14billion, and following Marriotts 15% fall in stock since their offer was made, Marriotts offer is now only worth 12billion. Since Starwood is selling itself to the highest bidder this should result in an about turn by the Starwood board but it's important to realise that Starwood may still stick with the Marriott offer taking the approach that the combined entity will be worth more than the sum of its parts post merger. Of course Starwood investors may simply want to seek out to the highest bidder, whatever the Starwood board recommends. And that's without the possibility of an improved offer from Marriott.
Interesting times indeed, though personally I'll be sad to see the deal fall through, so I hope the merger goes ahead.
Agreed brightlybob. I was/am looking forward to having access to the SPG portfolio with my MR points, regardless of any concerns about reduction in benefits, closure of redundant properties, devaluation, etc. SPG has coverage in places where Marriott is nonexistent or weak.
I remember reading somewhere that the break fee was the equivalent of about $2.50 for each of Starwoods 160 million issued shares. As a result Marriott does have a $2.50 per share built-in advantage. A couple of bucks extra per share should be enough to keep the deal afloat.
Alas, Marriott is the victim of its own success here, negotiating such a keen 95% stock based deal, it was seen as a bargain basement price when agreed, and very vulnerable to a cash raider, which looked far more likely as Marriotts stock price upon which over 90% of the offer is based, tanked.
Latest developments Chinese Insurer Anbang Jumps Starwood And Marriott Merger With $13.1 Billion Bid
Ball is now in Marriott's court to possibly increase their offer. Stay tuned.
This is getting pretty interesting. I'd like to know what Anbang see itself getting out of this acquisition (if they get it). Starwood put itself up for sale for a reason and being acquired by another lodging company would provide synergies that would, presumably, help to/eliminate the weaknesses in Starwood's business.
At any rate, I'd love to see a Marriott gain a location in Cuba! Bucket list destination for sure
Did you see this yet?
A... reason Marriott shareholders may prefer to be left at the altar: If Starwood ultimately chooses Anbang’s bid, Marriott will receive $400 million as a break-up fee....
Investors appear to be cheering for Marriott to move on. Its stock moved up nearly 2% Friday after this news was announced.
Marriott was getting a real bargain, albeit one rejected by every other player (indeed Marriott rejected it earlier that year).
The problem for Starwood was twofold, too small a footprint and top heavy on full service. Joining forces with Hilton, IHG or Marriott all of whom have a bigger footprint and a wide inventory of limited service properties made sense. This Anbang deal doesn't. Well, it doesn't for the group or for the properties, or Anbang, but Starwood shareholders get a load of cash, and they're numero uno in this deal.
If Anbang makes off with Starwood then it'll have purchased all Starwoods problems with no other inventory to resolve the above mentioned shortcomings. And be loaded with even more debt. Unless Anbang has plans to buy another all limited service group such as Choice and the finances to substantially improve that inventory their offer looks like one only made because Starwood is indeed a great bargain, but only for very few lodging companies. Anbang is not a lodging company. It might own a few hotels and a very small chain but Starwood is an enormous step up from there. My wife owns some M&S knickers, it doesn't make her qualified to own the shop!
And ... now Marriott is in control ... again: Starwood Agrees to Sweetened Merger With Marriott - WSJ "Starwood Hotels & Resorts Worldwide Inc. said it has agreed to a sweetened $13.6 billion deal with Marriott International Inc., trumping last week’s boosted bid from a group led by China’s Anbang Insurance Group Co."
Let's hope this is the final word. I do think the issues that led Starwood toward being acquired would not have gone away had the deal with Anbang been finalized.
Clearly the dust hasn't quite settled yet. I think it made sense for Marriott to raise their offer, but should this drag out longer, I don't see them doing so again. Fingers crossed.
Well it appears that per the revised offer from Marriott, Starwood is not allowed to engage in further discussions with Anbang, so maybe this is closer to being a done deal. It also raises the breakup fee to $450M from $400M.
The pre-merger antitrust review has already passed in the US and Canada and is pending in the EU and China. Certainly still obstacles in the way, but fewer now.
The shareholder meeting(s) previously scheduled for March 28 are now April 8.
Here's the section dealing with the previous offer with Anbang (referenced below as "the Consortium")
In connection with the amended merger agreement, Starwood’s Board of Directors has determined that the Consortium’s proposal no longer constitutes a “Superior Proposal”, and therefore under the merger agreement Starwood is no longer permitted to engage in discussions or negotiations with, or provide confidential information to, the Consortium. Starwood’s Board unanimously recommends the amended merger agreement with Marriott to Starwood’s stockholders.
It ain't over yet.
At this point, if Starwood opts for the Anbang deal, I expect Marriott to walk away collecting the $450M breakup fee in the process rather than increase their offer again.
My opinion is that despite the higher value offered in cash by Anbang, Starwood shareholders would be better off in the long run by going along with the Marriott merger. As brightlybob commented elsewhere, the problems that led to Starwood seeking a merger partner don't go away with the Anbang deal.
Guess we'll just have to wait this one out for a bit longer.
This must be the end of the merger, surely. Anbangs all cash $82 beats Marriotts $78 offer, especially as almost 90% of Marriotts is paper. I think it's bad for Starwood and its hotels, and if Blackstones cost cutting slash-and-burn approach is anything to go by, especially bad for SPG members. Hopefully Marriott pockets the $468million and walks away.
I agree with you brightlybob This is getting to be a rich deal Marriott. Marriott could build a few hotels with their 468 maybe even just 400 after lawyers and still come out ahead because of the unknowns that will happen to SPG if anybody but marriott owns it. I´d be a nervous SPG loyalist nowadays. However, with that said it seems like SPG knows it´s getting sold one way or another so it throwing out points like they are going out of style. So maybe I'll restate that and say, This year, it's good to be with SPG if you can get over the concern of the future. Next year, I'd start reconsidering. With each passing day, this sounds like a soap opera love triangle, "Who will SPG pick, Marriott or Anbangs?" Tune in tomorrow to find out.
Agreed as well! Walk away Marriott... take the money and run . SPG members (at least as far as I have read) all want Anbangs to buy... so I say let em have it.
LOL not a bad soap homoviator!
and to Starwood board net of break up fees the prices is not a whole lot higher. With foreign ownership the Chinese deal will take longer. I don't think Marriott will up their bid but if it gets more expensive they will find a way to get it back with more cost cuts and I bet less of a loyalty program . Shareholders of Starwood will make out but not so sure for employees or guests
Agreed. It'll be interesting to see what Anbang does with Starwood (provided they actually win), but, in my opinion, it won't be good. Starwood members see this as a win, but Starwood put itself up for sell for a reason. Maybe I'm being a skeptic, but I doubt Anbang knows what it's doing and/or has a plan to make the improvements Starwood couldn't make on its own.
Of course, the company's current management may have a plan and just needs cash from Anbang? It could very well end up being like Volvo and their great turnaround after being acquired by the Chinese too... But we'll just have to wait and see! For it to be a success, Anbang will have to be willing to make large investments in the company beyond the purchase price.
I found this article very helpful in the reasons why this Chinese company seemed to have come out of nowhere and wants to buy Starwood.
It is from Aug of last year but, the Yuan is still devaluing. Investors in China can't invest in China anymore. They need to put as much money as they can into stable things outside of China. I am pretty sure that if Marriott were to come back with another offer, Anbang would come right back with an even higher one.
I read that Japan did the same thing and It didn't pan out for them well.
Starwood of course doesn't have to take the higher offer. Maybe in a few years Starwood will be back up for sale and at a lower cost than what Anbang paid for it.
I agree with kharada46, I don't think Anbang has a plan for improvement.
Yup, SeaTexan, you see Chinese companies gobbling up companies and more all over the world now days. So far, it only looks as if Volvo is seeing much success with this, while some Chinese companies may have gotten burned... Like the one backing Faraday Future, the super promising electric car startup that now seems like vaporware!!
What do you make of this?
bejacob, I believe this article will shed some light on Anbang walking away:
Seems like they are, at worst a total shame, or at just a shady Chinese company that probably bit off more than it could chew. Or if you believe conspiracy theorists, Anbang's sole purpose would to inflate the purchase price for Marriott.
I'm afraid of what the increased acquisition cost will mean for us and Marriott moving forward...
That was sudden! I think this may have come about because Starwood is rumoured to have asked Anbang some due-diligence type questions themselves to test whether Anbang really could come up with all that cash before confirming Anbangs offer as "superior". Anbang may not have welcomed that kind of clarity...
At times like this, it is clear to see who in in the US, and who is in the UKbrightlybob. Other Insiders were discussing this in the middle of our night, then we pick it up when we wake up!
Those of us that suffer from occasional insomnia, mess with your conclusion, Tommo781!
You're taking some fire on this conclusion Tommo781, yet i agree with you. At 03:00 Marriott Insiders time its just you and me filling up the boards with our first cup of the day wit
Well kharada46 you millenial types still need a GenX parent to remind you about beddy-byes.
Of course as a GenX, Babyboomer Misterchk used to remind me it was time for Bo-Bo's but since he's been suspended I now get to stay up late - WooHoo!
I think this is really excellent news for us Marriott loyalists (still holding my breath through April 8th). I have my first stay at an Aloft in September (not my choice, it is in a wedding block), but can't wait to have all the extra options and price points in different cities. There's been some good ideas thrown out about how Marriott would grow and consolidate certain brands, but it will be a fun roller coaster over the next year to two to see how everything shakes out. Marriott's very strong operationally and Starwood is very innovative, I think we'll be getting the best of both worlds.
I'm cautiously optimistic. While I welcome all the new places where we can earn and use points, mergers like this tend to benefit the shareholder far more than the customers.
I'm still in favor of the merger. I just know that we'll likely encounter some disappointments along the way. Here's hoping they'll be relative minor.
droma, I agree. I am looking forward to access to the SPG properties. SPG is very strong in some parts of the world where Marriott is nonexistent (Fiji, Tahiti, Bora Bora, Maldives).
According to the press this is finally over with Marriott the winner.
I wonder how this will affect Starwood Preferred Guest program and getting discounts? I use the below site when I book reservations for best deals.
This merger is definitely going to be great in terms of property access for us, and while it remains to be seen if the overall merged program will be negative or positive for us, I am concerned about the broader implications it may have for the hospitality industry as a whole.
In my humble opinion, it represents a massive reduction in competition and could cause further consolidations. I wouldn't be surprised if we see another merger in the near future. Maybe IHG and Hyatt? I hope not.
Karada have mentioned many times on this thread that too much consolidation leads to oligopolies which have never been good for consumers. Just look at how much airfares have dropped with their largest cost dropping dramatically ( oil) -have dropped airfares- not at all. So yes there will be other mergers. Only 25 days until I touch down on your beautiful state
You're absolutely correct jerryl! Couldn't agree more.
24 more days huh? Time flies! So about our meet up??