This Is How Marriott Could Lose Starwood to Anbang’s Investor Group

Although Marriott International successfully wooed Starwood Hotels & Resorts back with its newly revised merger agreement worth $13.6 billion on March 21, there are still a number of reasons why rival Anbang Insurance Group has the best odds for winning Starwood in the end, before Marriott and Starwood's shareholder votes take place on April 8. Here's why: Show Me the Money Given Anbang's track record and what we've seen so far in its overtures to buy Starwood, it's clear Anbang doesn't shy away from spending the big bucks to get what it wants. The group has spent a total of nearly $7 billion since 2014 on foreign acquisitions, including the $1.95 billion in cash it spent to buy the Waldorf-Astoria from Hilton Worldwide in October 2014 — the largest amount ever spent on a U.S. hotel property. Anbang is also set to close a deal with Blackstone to acquire Strategic Hotels & Resorts for approximately $6.5 billion. Anbang is also not acting alone in its attempt to acquire Starwood; its consortium includes two well-known, and well-funded private equity firms, J.C. Flowers & Co. and Primavera Capital. Some analysts expect Anbang to counter Marriott's recent offer with a significantly higher all-cash bid. In a note to investors, David Loeb, managing director and senior real estate research analyst for Milwaukee-based Baird Equity Research, estimated Anbang would give as much as $85 per share for Starwood, about $5 more than what Marriott has presented to Starwood (approximately $79.53 per share). "I think Anbang is pretty likely to come back and make another offer," Loeb told Skift. "I think the door is open for that and it seems like the likely outcome at this point. If Anbang doesn't come back, it's Marriot's deal. But I think that's unlikely. I think Marriott is done." To be clear, Marriott's new offer is much more attractive than the one it initially made to Starwood back in November, but it still might not be enough. During a call with investors on March 21, Marriott CEO Arne Sorenson affirmed that, saying, "In some respects, you can look back and say maybe the deal [from November] was almost too good, which is what drew in another bidder at the last moment." "Marriott has the benefit of paper [stock]—75 to 80 percent paper—which is tremendously powerful when you can use it, but also has limitations that you don't want; you don't want to be diluted to your current earnings," Ted Teng, Leading Hotels of the World CEO