Just when I was beginning to think the long-running takeover saga with Starwood was settled with Marriott’s improved offer, the Chinese insurance conglomerate Anbang Insurance Consortium has returned to sweeten its offer for Starwood. According to multiple sources, Anbang’s new offer has topped Marriott’s for a second time.

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Marriott is continuing to say that its offer is superior overall, even if it is slightly less per share. According to a press release from Marriott,

“On March 26, 2016, Starwood notified Marriott that it had received an updated unsolicited proposal from a consortium of potential investors, led by Anbang Insurance Group, which its Board is considering.  Marriott will monitor this development as it and Starwood continue to work toward the closing of its transaction and the successful integration of the two companies in anticipation of votes by each company’s stockholders on April 8, 2016. Starwood stated today that its Board of Directors has not changed its recommendation in support of Starwood’s merger with 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.

The new unsolicited proposal by the Anbang consortium follows a March 21, 2016 announcement by Marriott International and Starwood that the companies had signed an amendment to their definitive merger agreement.  Under the terms of that amended merger agreement, Starwood shareholders will receive $21.00 in cash and 0.80 shares of Marriott International, Inc. Class A common stock for each share of Starwood Hotels & Resorts Worldwide, Inc. common stock. Starwood shareholders will own approximately 34 percent of the combined company’s common stock after completion of the merger, based on current shares outstanding.

On March 25, 2016, Starwood and Marriott filed 8-Ks with the Securities and Exchange Commission (SEC) noting that Starwood’s financial advisors have provided analysis that recognizes that in addition to the $21.00 per share cash portion of the amended Marriott – Starwood agreement, the stock consideration offers a superior long-term value for Starwood stockholders. The advisors’ provided the company with opinions, available to all Starwood stockholders and attached to the 8-Ks, that noted the value range for Marriott on a standalone basis, before giving effect to the merger, is between $92.35 to $103.46 per share utilizing a discounted cash flow analysis for Marriott stock based upon the newly updated adjusted forecasts. Stockholders should review the 8-Ks in their entirety.  The foregoing excerpt from the opinion of Starwood’s financial advisors is only part of such advisors’ analysis and is subject to a number of assumptions, qualifications and limitations which are described in detail in the 8-Ks.”

My Take

No surprise that this isn’t over. I was not completely sure that Marriott would sweeten its original agreed upon offer. Marriott is a well-run and conservative company in my opinion, and I can’t see them going to the ends of the earth to secure a Starwood buyout. Starwood’s board may see things Marriott’s way, but it is difficult to say at the moment. At this point, I think the odds are on the side of Marriott collecting its $400 million plus breakup fee and walking away. Interesting to watch unfold for sure.