Marriott International and Starwood Hotels and Resorts Worldwide have now agreed upon amended merger terms
Marriott International have today revealed that amended merger terms have now been agreed with Starwood Hotels and Resorts Worldwide.
The new agreement features a revised bid per Starwood share, now offered at US $79.53 per share by Marriott. With the separate Interval Leisure Group (ILG) transaction value, the new offer leads to a total per share value of US $85.36.
According to Marriott, the new terms value Starwood at approximately $13.6 billion ($79.53 per share), consisting of $10 billion of Marriott International stock (based on the market closing price of US $73.16 on March 18, 2016) and $3.6 billion of cash, based on approximately 170 million outstanding Starwood shares.
The Marriott-Starwood merger was originally announced in November 2015. During these discussions between the two hotel groups, Marriott had agreed on a value of US $63.74 per Starwood share.
Last week, an "unsolicited" but "superior proposal" made to Starwood by a consortium of companies, represented by Anbang Insurance Group saw Starwood shares valued by the Chinese investor group at US $78 per share. With ILG transaction consideration, the bid made by Anbang created a combined value of $83.83 per Starwood share.
A statement made today by Marriott International, hotel group stated: “In connection with the amended merger agreement, Starwood’s board of directors has determined that the Consortium’s [Anbang Insurance Group’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.”
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Commenting on the new terms, Starwood Hotels & Resorts Worldwide chairman of the board of directors Bruce Duncan said: “We are pleased that Marriott has recognized the value that Starwood brings to this merger and enhanced the consideration being paid to Starwood shareholders.
“Throughout this process, our board of directors has remained laser-focused on maximizing value for Starwood shareholders, and Marriott’s revised offer provides the highest value to our shareholders through long-term upside potential from shared synergies and ownership in one of the world’s most respected companies, as well as significant upfront cash consideration.”
New terms of the amended merger agreement, stated by Marriott are as follows:
• Increased cash consideration to US $21 for each share of Starwood common stock.
• Revised exchange ratio of 0.80 shares of Marriott common stock for each share of Starwood common stock.
Marriott has also stated an expected increase in annual cost synergies over the first two years, up to US $250 million from the US $200 million originally estimated in November 2015, when the merger was originally agreed.
Commenting on the amended agreement, Marriott International president and CEO Arne Sorenson said: “We expect to accelerate the growth of Starwood’s brands, leveraging Marriott’s worldwide hotel development organization and owner and franchisee relationships.
"On the top line, combined sales expertise and increased account coverage should drive additional customer loyalty and increase revenue. Hotel level cost savings should benefit owners and franchisees, including better efficiencies in reservations, procurement and shared services. The company will have a broader global footprint and the most powerful frequent traveller programs in the industry, strengthening Marriott’s ability to serve guests wherever they travel.”
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