Starwood Hotels and Resorts Worldwide has revealed that on March 10, 2016 it received a non-binding proposal from a consortium of companies (the Consortium) to acquire all of the outstanding shares of common stock of Starwood for $76 per share in cash.
The deal is valued at USD$13 billion, with the approach coming from a group of investors led by China’s Anbang Insurance Group and if accepted, it would de-rail the company’s merger deal with Marriott that’s been recommended for approval by Starwood’s board.
Pursuant to separate agreements entered into by Starwood, stockholders would additionally receive consideration in the form of Interval Leisure Group (ILG) common stock from the previously announced spin-off of its vacation ownership business, Vistana Signature Experiences, and subsequent merger with ILG, currently valued at approximately $5.50 per Starwood share, based on the 20-day VWAP (volume weighted average price) of ILG common stock ending March 11, 2016.
As announced on November 16, 2015, Starwood entered into a definitive merger agreement with Marriott International under which Marriott would acquire Starwood in a stock and cash transaction.
Starwood has received a waiver from Marriott enabling it to engage in discussions with, and provide diligence information to, the Consortium in connection with its proposal. Starwood commenced discussions with the Consortium on March 11, 2016.
The Marriott waiver expires at 11:59 pm United States Eastern Time on March 17, 2016.
Starwood’s Board of Directors has not changed its recommendation in support of Starwood’s merger with Marriott.
Starwood said the Board, in consultation with its legal and financial advisors, will carefully consider the outcome of its discussions with the Consortium in order to determine the course of action that is in the best interest of Starwood and its stockholders.
It said the Consortium has not completed diligence and there are a number of matters to be resolved in the Consortium’s proposal.
Starwood said there can be no assurance that discussions will result in a binding proposal from the Consortium or that a transaction with the Consortium will be approved or consummated and it does not intend to comment further on its discussions with the Consortium prior to the expiration of the waiver period.
Under the terms of the merger agreement with Marriott, at closing, Starwood stockholders would receive 0.92 shares of Marriott International, Inc. Class A common stock and $2.00 in cash for each share of Starwood common stock. The total consideration to be paid by Marriott, excluding debt assumed, totals $10.8 billion, consisting of $10.5 billion of Marriott common stock, based on the 20-day VWAP of Marriott common stock ending on March 11, 2016, and $339 million of cash, based on approximately 170 million fully diluted Starwood shares outstanding at February 19, 2016.
Based on Marriott’s 20-day VWAP ending March 11, 2016, the merger transaction has a current value of $63.74 per Starwood share, including the $2.00 cash per share consideration. Starwood stockholders will separately receive consideration from the spin-off of the Starwood timeshare business and subsequent merger with ILG of approximately $5.50 per Starwood share, based on the 20-day VWAP of ILG common stock ending March 11, 2016.