Starwood Hotels & Resorts Worldwide Inc., which agreed to be bought by Marriott International Inc., received a separate, unsolicited takeover proposal from a group of companies led by China’s Anbang Insurance Group Co.
The offer is $76 a share in cash, Starwood said in a statement on Monday. That values the Stamford, Connecticut-based hotel company at about $12.9 billion, based on its estimate of 170 million shares. While Starwood didn’t identify the bidder, Marriott said in a separate statement that Anbang is leading the group’s offer, and confirmed it will continue with its own bid.
Starwood, whose brands include Westin, W and St. Regis, “will carefully consider the outcome of its discussions with the consortium in order to determine the course of action that is in the best interest of Starwood and its stockholders,” the hotel operator said. Starwood said it still supports Marriott’s offer, which would create the world’s largest hotel company.
Starwood shares jumped 7.9 percent to $76 at 8:57 a.m. New York time in premarket trading.
Marriott’s offer for Starwood valued the company at $72.08 a share when it was made. Starwood said on Monday that the Marriott offer is worth $63.74 a share based on the company’s 20-day average stock price through March 11.
Tim Craighead, director of Asian Research/Gaming & Lodging for Bloomberg Intelligence, said the new offer is a “very surprising development” because the deal with Marriott seemed to be “done.”
“Any board has to consider, ‘Do I want $76 in cash now or something on the order of $65 in current value in Marriott stock that has the potential to grow,” Craighead said in a phone interview. “That’s the decision Starwood has to make.”
For Anbang, “having a branded portfolio of hotels would allow the company to participate in the growing base of domestic and international travel that’s a side effect of the emerging Chinese consumer class,” Craighead said.
A Beijing-based press official for Anbang, who asked not to be named because of company policy, said the company had no comment.
Anbang has also agreed to buy Strategic Hotels & Resorts Inc. from Blackstone Group LP for about $6.5 billion, according to people with knowledge of the matter. That deal would give the Beijing-based insurer 16 U.S. luxury resorts and hotels including the Four Seasons resorts in Scottsdale, Arizona, and Jackson Hole, Wyoming; Ritz-Carltons in Half Moon Bay and Laguna Niguel, California; San Diego’s Hotel del Coronado; and Manhattan’s JW Marriott Essex House.
J.C. Flowers & Co., the private equity firm founded by Christopher Flowers that focuses on financial companies, and Chinese investment firm Primavera Capital Group are part of the consortium bidding for Starwood, according to two people familiar with the talks. A spokeswoman for Flowers declined to comment and a representative for Primavera couldn’t be immediately reached for comment.
Starwood would have to pay Marriott a $400 million termination fee in cash if it decided to enter into another deal or changes or withdraw its recommendation to its stockholders to vote in favor of the Marriott deal.
Under both offers, Starwood shareholders would also get Interval Leisure Group stock from a previously announced spin off of vacation ownership business, Vistana Signature Experiences, and subsequent merger with ILG.
–With assistance from Jonathan Browning, Ed Hammond and Cathy Chan.
This article was written by Andrew Blackman and Prashant Gopal from Bloomberg and was legally licensed through the NewsCred publisher network.