International hotel operator Marriott International Inc won over Starwood Hotels and Resorts Worldwide Inc with a sweetened bid worth more than US$14.4 billion just days after a Chinese insurance company appeared to steal it away from the hotel chain with a more lucrative offer.
Starwood, which owns the Sheraton, Westin and St Regis brands, over the weekend became the first US hotel operator to gain access to Cuba, a day before the arrival of US President Barack Obama. It is the first visit to Cuba by a sitting president in almost 90 years as relations between the two nations thaw.
The revised deal would give Starwood shareholders US$21 in cash and 0.80 shares of Marriott Class A stock for each Starwood share. Starwood shareholders are also expected to get Interval Leisure Group stock valued at US$5.83 per share. Taken together, that would value Starwood stock at US$85.36 per share, or about US$14.41 billion.
Just days ago, China’s Anbang Insurance Group Co (安邦保險集團) put up an offer of US$83.83 for each Starwood share, or about US$14.15 billion. Starwood stockholders would have received US$78 in cash for each share they own, plus US$5.67 in stock for a spinoff of a vacation business.
Anbang made a dramatic entry into the US two years ago when it bought the famed Waldorf Astoria New York for almost US$2 billion. Days before it contested Marriott for control of Starwood, it laid down US$6.5 billion to acquire Strategic Hotels & Resorts Inc, which owns several high-end properties, including the JW Marriott Essex House in New York and Hotel Del Coronado in San Diego, California.
Starwood, based in Stamford, Connecticut, offered a unique opportunity for Marriott, because the hotel chain put itself up for sale.
Marriott, based in Bethesda, Maryland, said one of the key assets Starwood brought to the deal was its much loved loyalty program, Starwood Preferred Guest.
Marriott yesterday said that it is confident that it can achieve US$250 million in annual cost savings within two years of closing on the Starwood transaction. That is US$50 million more than in estimated in November last year, when it gave its initial offer to Starwood.
Marriott and Starwood still anticipate the deal closing around midyear, assuming it receives the necessary approvals.
Shares of Starwood rose US$2.43, or 3 percent, to US$83 before the market open, while Marriott’s stock shed US$0.97 to US$72.19.
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