Marriott International has topped Anbang Insurance Group's bid to acquire Starwood Hotels & Resorts Worldwide, with an offer valued at $13.6 billion. The company had clinched a deal with Starwood in November for US$72.08 per share.
"The companies have signed an amendment to their definitive merger agreement that creates the world's largest hotel company", they said. Starwood shareholders would own about 34 percent of the combined company.
The Marriott-Starwood deal will create the world's largest hotel chain with top brands including Sheraton, Ritz Carlton and the Autograph Collection. "We are also more confident of achieving our updated target of $250 million of cost synergies".
"With its asset light business model, multi-year industry leading unit growth, powerful brands, and consistent return of capital to shareholders, Marriott stock has consistently traded at valuation premiums to its public peers".
Starwood shareholders will receive $21.00 in cash and 0.80 shares of Marriott International Inc.
Under the terms of the November agreement it was $2 and 0.92 share.
On Friday Starwood had announced it favored the offer from a consortium led by Anbang of $13.2 billion, or $78 per share, and would notify Marriott that their agreed merger was off. That was after Anbang had improved its offer by $2 per share.
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Will Anbang up the ante?
"We expect to accelerate the growth of Starwood's brands, leveraging Marriott's worldwide hotel development organisation and owner and franchisee relationships".
"We believe this is the best bid Marriott is willing to make", Canaccord Genuity analyst Ryan Meliker wrote in a note.
"In the further diligence we have completed in last five months, we have become even more convinced of the tremendous opportunity presented by this merger", Marriott Chief Executive Officer Arne Sorenson told analysts on a conference call.
Starwood shares were up four per cent at US$83.79 in afternoon trading.
Starwood Chairman Bruce Duncan said the company was pleased that Marriott has "recognized the value" that Starwood brings to this merger. If the companies receive enough votes, they expect the deal to close in the middle of this year. This revised agreement offers superior value for Starwood's shareholders, the ability to close quickly, and provides value creation potential that will allow both sets of shareholders to benefit from improved financial performance.
Anbang made a dramatic entry into the US two years ago when it bought the famed Waldorf Astoria of York for nearly $2 billion. That added 16 luxury hotels and resorts in the United States to its portfolio, including the JW Marriott Essex House in Manhattan and the Hotel Del Coronado in San Diego.