Starwood Merger: Anbang Consortium Withdrawals, Clears Way For Marriott
…As Starwood Reaffirms Commitment To Merge With Marriott
…Values Starwood At $77.94 Per Share or $13.3b
… Stockholders Meet To Consider Marriott Transaction April 8
Starwood Hotels & Resorts Worldwide has disclosed that the consortium consisting of Anbang Insurance Group Co., Ltd., J.C. Flowers & Co. and Primavera Capital Limited has informed Starwood that as a result of market considerations, it has withdrawn its non-binding proposal to acquire all of the outstanding shares of common stock of Starwood for $82.75 per share in cash and does not intend to make another proposal.
The consortium withdrawal clears the way for Marriott to merge with Starwood and already the hospitality giant has revealed that it has fixed a meeting of stockholders to consider the merger with Marriott offer for April 8, 2016.
Starwood’s Board of Directors continues to unanimously support the existing merger with Marriott International Incorporated, which will create the largest hospitality company in the world.
Speaking on the development, Chairman of Starwood’s Board, Bruce Duncan, stated, “Throughout this process, we have been focused on maximising stockholder value now and in the future. Our Board is confident this transaction offers superior value for Starwood’s stockholders, can close quickly, and provides value-creation potential that will enable both sets of stockholders to benefit from future financial performance. We continue to be very excited about the combination of our two companies and are committed to completing this deal in an expeditious manner. We are confident Starwood stockholders will support a merger that will create the world’s best and biggest hotel company and which offers significant long-term upside for not only our stockholders, but also our company and associates.”
On his part, the Chief Executive Officer, Starwood, Thomas Mangas, said, “We are excited to be part of the world’s largest hotel company with an unparalleled platform for global growth. The existing merger agreement provides substantial value to our stockholders through significant upfront cash consideration and long-term upside potential from projected shared synergies, including $250 million in cost synergies and significant revenue synergies, as well as ownership in one of the world’s most respected companies.”
Under the terms of the amended merger agreement, as announced on March 21, 2016, Starwood shareholders will receive $21.00 in cash and 0.80 shares of Marriott Class A common stock for each share of Starwood common stock.
Excluding Starwood’s timeshare business, the transaction values Starwood at approximately $13.3 billion ($77.94 per share), consisting of $9.7 billion of Marriott stock, based on the closing price of $71.18 on March 31, 2016 and $3.6 billion of cash, based on approximately 170 million outstanding Starwood shares.
Starwood shareholders will own approximately 34 percent of the combined company’s common stock after completion of the merger, based on current shares outstanding.
Starwood stockholders will separately receive consideration in the form of Interval Leisure Group (ILG) common stock from the spin-off of the Starwood timeshare business and subsequent merger with ILG, currently valued at $6.13 per Starwood share, based on ILG’s share price as of market close on March 31, 2016 .
The amended agreement and the ILG transaction have a combined current value of $84.07 per share of Starwood common stock.
Meanwhile, the special meeting of Starwood stockholders to vote on and approve the Marriott-Starwood merger agreement has been scheduled for Friday, April 8, 2016 at 10:00 a.m. Eastern Time at the Sheraton Stamford Hotel, 700 East Main Street, Stamford, CT 06901.
The Starwood Board of Directors unanimously recommends that Starwood stockholders vote their shares “for” the merger agreement with Marriott at the April 8 special meeting.
Lazard and Citigroup are serving as financial advisors while Cravath, Swaine & Moore LLP is serving as legal counsel to Starwood.