Starwood stated on Monday, that China’s Anbang Insurance Group has lifted its offer for Starwood Hotels & Resorts Worldwide Inc. to nearly $14 billion, the most recent bid in the current battle for a merger deal against Marriott International Inc.
The bidding of Starwood has disappointed Marriott’s goals to launch as the world’s biggest accommodation company with nearly 5,700 hotels as compared to Anbang’s interest which is to set up a more prominent profile of U.S. land and building assets.
Anbang will be the biggest ever Chinese company in the United States upon the acquisition of Starwood, who owns the Sheraton and Westin brands.
Starwood stated on Monday that Anbang’s consortium, which is consisting of J.C Flowers & Co, a private equity firm and Primavera Capital Ltd, has quoted a $82.75 cash per share offer which is moderately fair, and may further attract a proposal that is more advanced to Marriott’s deal.
Starwood said that Marriott’s present cash-and-stock offer, disclosed on March 21, stands at around $78 per share. Also, the company’s board has not altered its proposal to its investors who are supporting the merger with Marriott. Voting for Starwood investors on the approval for the Marriott alliance is set to take place on April 8.
An analyst of Raymond James, Bill Crow said:
“Marriott has the financial capacity and the wherewithal to push its bid up higher. However, so much of the transaction is based on Marriott’s current share price, I think investors would be less than thrilled if it increased its offer materially at this juncture.”
In a statement Marriott disclosed that the company is positive about the last offer made for the merger agreement with Starwood and that it is in the best interest for both of the companies.
Last week, Marriott stated that it trusts that it can reach a target of $250 million in annual costs over the span of two years after settling the deal with Starwood, which has increased from the estimated $200 million in November 2015 at the time when the original merger agreement was signed.
The Committee on Foreign in Investment in the United States, an intermediary panel that is formed to review merger deals in order to confirm that they are not detrimental to the safety of national security, may find opposition to the acquisition of Starwood by Anbang. However, in this scenario sources stated that both Starwood and Anbang trust that a merger would definitely receive CFIUS approval.
As per the recent merger agreement with Marriott, Starwood will pay a separation fee of $450 million to Marriott.
“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.”