Starwood Gets Higher Offer From Anbang-led Group, Threatening Marriott Deal--4th Update

By Joshua Jamerson 

The battle for Starwood Hotels & Resorts Worldwide Inc. continued Monday as the group led by China's Anbang Insurance Group Co. increased its bid for the hotelier to $14 billion, raising the stakes in the high-profile bidding war with Marriott International Inc.

Starwood said the new offer from Anbang, a Chinese insurance giant, is likely to be a "superior proposal" to Starwood's $13.6 billion takeover agreement with Marriott. Such a designation allows Starwood to engage in discussions with and provide diligence information to the consortium in connection with its proposal.

Marriott on Monday reaffirmed its commitment to acquiring Starwood, arguing that its deal was the best course because the combined company would have a larger global footprint with a wider choice of brands for consumers. In addition, Marriott warned Starwood stockholders about getting lured by the higher offer.

Starwood stockholders "should give serious consideration to the question of whether the Anbang-led consortium will be able to close the proposed transaction, with a particular focus on the certainty of the consortium's financing and the timing of any required regulatory approvals," Marriott said.

Representatives from Anbang and Starwood declined to comment on Marriott's comments.

Starwood's stock rose 2.2% to $83.93 in midday trading in New York, as Marriott's shares increased 3.8% to $71.27.

The revised, nonbinding offer from the Anbang group raises the proposed all-cash purchase price to $82.75 a share. Anbang's consortium also includes J.C. Flowers Co. and Primavera Capital Ltd.

Starwood, the owner of the Westin and Sheraton brands among others, said it received a sweetened offer from Anbang of $81 a share in cash on Saturday. Later that day, following discussions between the two parties, the Anbang consortium raised its all-cash proposal to $82.75 a share.

In comparison, the Marriott agreement valued Starwood's shares at $79.53 each. Under that revised deal, Starwood shareholders would receive $21 in cash and 0.8 Marriott shares for each Starwood share.

The original deal between the two companies, in November, valued Starwood at $72.08 a share. Earlier this month, the group led by Anbang offered $76 a share in cash and then raised its offer to $78 a share.

A combination of Starwood and Marriott--the owner of Courtyard by Marriott and the extended-stay Residence Inn--would create the world's No. 1 hotel chain with more than 1 million rooms and 30 brands.

On Monday, Marriott and Starwood each adjourned their respective stockholder meetings to vote on the transaction until April 8. If blessed by regulators and shareholders, the deal could close in mid-2016, the companies have said.

If the Marriott deal falls apart, Starwood would pay a breakup fee of $450 million, up from $400 million in the previous pact. If that fee is triggered, Starwood also would be on the hook to pay Marriott as much as $18 million for costs related to financing the deal.

The Wall Street Journal had reported, citing a person familiar with Anbang's thinking, that the slight increase in the breakup fee indicated that Starwood was leaving the door open for Anbang to raise its offer again.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

March 28, 2016 13:32 ET (17:32 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.