Starwood Looks to Dump Marriott for Anbang Proposal

Hotelier calls unsolicited proposal “superior,” ends prior merger agreement.

The hotel mega-merger between Starwood and Marriott may not move forward after Starwood determined an unsolicited bid by an investor group lead by Anbang Insurance Group was a “superior proposal.” In a press release, the hotel operator announced their planned termination of the merger agreement with Marriott, moving in favor of the alternative proposal.

Under the terms of the Anbang-lead proposal, the investor group would purchase all outstanding shares of Starwood stock for $78 per share, reflecting an increase over the Marriott proposal. In addition, current stockholders would receive additional financial consideration in the spinoff of Interval International, a company focused on vacation memberships and exchange programs.

The position creates a juxtaposition for the hotelier, as the Starwood board of directors maintain their recommendation for the Marriott proposal instead. However, corporate leaders believe that the fully funded Anbang-lead proposal constitutes a “superior proposal” that satisfies the exit terms of the original merger agreement.

As a result, Starwood is postponing their special stockholder meeting scheduled for the end of March, where shareholders were expected to formally approve the Marriott merger. Instead, the hotel company will hold off on the meeting until after discussing the proposal with their original suitor, while working to “provide sufficient time for the filing or mailing of additional information regarding these developments to its stockholders.” Until approved by stockholders, neither proposal is considered final.

Although Starwood is publicly favoring the unsolicited bid, a merger with Marriott is not entirely off the table. Marriott can submit a counter-proposal until the end of March 28 for review by Starwood.