Starwood Hotels and Resorts Worldwide has announced publicly that the Starwood Board of Directors have determined that it considers an Anbang consortium proposal to acquire Starwood to be a “Superior Proposal” to Marriott’s existing merger agreement with Starwood. The consortium consists of Anbang Insurance group Co. Ltd, J.C. Flowers & Co. and Primavera Capital Limited.
Starwood intends to terminate the merger agreement with Marriott unless Marriott and Starwood agree on revision to their merger agreement that Starwood’s board of directors determines to be superior to the Anbang proposal.
Under the merger agreement, Marriott has the right to propose revised terms and Starwood must negotiate in good faith with Marriott to discuss any such proposed revised terms for a period of five business days ending on 28 March 2016 at 11.59pm Eastern Time.
If Starwood decides to terminate the Marriott merger agreement in order to accept the consortium proposal, Starwood must pay Marriott a termination fee of US$400 million in cash.
The Anbang Consortium’s proposal contains definitive documentation in which the Consortium would acquire all of the outstanding shares of common stock of Starwood for US$78 per share in case, an increase from the US$76 per share proposal made by the Consortium on 10 March 2016. Pursuant to separate agreements entered into by Starwood, Starwood stockholders would additionally receive consideration in the form of Interval Leisure Group common stock from the previously announced spin-off of its vacation ownership business, Vistana Signature Experiences, and subsequent merger with ILG currently valued at approximately US$5.67 per Starwood share, based on the 20-day volume weighted average price of ILG common stock ending 17 March 2016. On this basis, the Consortium proposal and the ILG transaction have a current value of US$83.67 per share. The Starwood Board believes that the binding and fully financed proposal from the Consortium provides a high degree of closing certainty.
Under the terms of the merger agreement with Marriott, Starwood stockholders would receive 0.92 shares ofMarriott International, Inc. Class A common stock and $2.00 in cash for each share of Starwood common stock. Based on Marriott’s 20-day VWAP ending March 17, 2016, the merger transaction has a current value of US$65.33per Starwood share, including the US$2.00 cash per share consideration. Starwood stockholders will separately receive consideration from the spin-off of the Starwood timeshare business and subsequent merger with ILG of approximately US$5.67 per Starwood share, based on the 20-day VWAP of ILG common stock ending March 17, 2016. On that basis, the merger with Marriott and the ILG transaction have a current value of US$71.00 per share.
Marriott is in the process of reviewing the Anbang consortium’s proposal and is carefully considering its alternatives. The company is considering postponing its Special Meeting of Stockholders which is currently scheduled for 28 March 2016.
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