Starwood Deems Consortium Offer ‘Superior Proposal’ to Marriott Agreement

On Friday, Starwood announced that a takeover proposal by a consortium led by Chinese insurer Anbang was a “superior proposal” compared to the company’s merger agreement with Marriott.

Marriott [NASDAQ:MAR] issued a statement on Friday concerning the status of its merger agreement with Starwood, stating that Starwood had informed it that Starwood’s board of directors preferred the Chinese proposal.

Starwood’s board was persuaded by Anbang’s US$2 (RM8.20) increase in its Monday offer to US$78 a share, and said it plans to notify Marriott International that their already agreed merger was off.

John Paulson, president of hedge fund Paulson & Co, Starwood’s largest shareholder, welcomed Anbang’s sweetened offer, saying it “better reflects the value of Starwood”. Shares of Marriott rose $1.36, or 1.9 percent, to $73.16. Starwood, besides being one of the world’s biggest hotel operators, owns buildings worth about $4 billion, including the landmark St. Regis off Fifth Avenue in Manhattan, according to Loeb.

In 2014, Anbang bought the storied Waldorf Astoria for a record $1.95 billion.

This communication contains “forward-looking statements” within the meaning of US federal securities laws, including Marriott’s alternatives for responding to the Anbang consortium proposal, Starwood’s possible termination of the Marriott merger agreement, and other anticipated future events and expectations that are not historical facts. Class A common stock and $2.00 in cash for each share of Starwood common stock.

“While we expect Marriott to counter the consortium’s proposal, we believe Marriott will remain disciplined, and it appears increasingly likely, in our opinion, that Starwood will be acquired by the consortium”, Mr Loeb wrote.

The management of the company that owns Sheraton and Westin hotels has rebuffed a takeover offer from Marriott in favour of an even better one from Chinese company Anbang.

Both Starwood and Marriott are considering postponing their respective Special Meeting of Stockholders which are now scheduled for March 28, 2016.

Anbang has been on a USA hotel buying spree as Chinese insurers rush to acquire high-yielding assets as they struggle to keep up with the policy liabilities of the country’s aging population.

If Starwood falls through, Marriott could potentially make another big move, as Hyatt Hotels has been rumored to be open to a merger or acquisition, according to the report.

Anbang has been mopping up American real estate with an eye for some of the most iconic hotel brands. US President Barack Obama used to stay at that hotel when visiting United Nations headquarters in NY.