Anbang drops Starwood bid; Starwood-Marriott merger back on track

Marriott Starwood

And just like that, it's over.

The Wall Street Journal is reporting that the consortium led by China's Anbang Insurance is withdrawing its bid to take over Starwood Hotels. As such, Starwood has released a statement reaffirming its commitment to merge with Marriott, as originally planned in November.

"Throughout this process, we have been focused on maximizing stockholder value now and in the future," Bruce Duncan, chairman of Starwood’s Board, said in a statement. "Our Board is confident this transaction offers superior value for Starwood’s stockholders, can close quickly, and provides value-creation potential that will enable both sets of stockholders to benefit from future financial performance."

“The existing merger agreement provides substantial value to our stockholders through significant upfront cash consideration and long-term upside potential from projected shared synergies, including $250 million in cost synergies and significant revenue synergies, as well as ownership in one of the world’s most respected companies,” CEO Thomas Mangas added. 

Arne Sorenson, president and CEO of Marriott International, echoed the sentiments in a statement of his own. "Together, we can provide opportunities for significant equity upside and great long-term value driven by a larger global footprint, wider choice of brands for consumers, substantial synergies, and improved economics to owners and franchisees leading to accelerated global growth and continued strong returns.”

Just a little over two weeks ago, the consortium, which also includes J.C. Flowers & Co and Primavera Capital Limited, announced an unsolicited all-cash bid of nearly $13 billion for Starwood worth $76 a share, a significant increase over the offer made by Marriott in November ($63.74 per share).

After a week of consideration, Starwood opted to go with Anbang, and announced plans to to terminate the Marriott merger agreement and enter into a definitive agreement with the Consortium. Over the following weekend, Marriott upped its bid to $13.6-billion, and Starwood accepted the offer. 

On Saturday, Starwood received another non-binding proposal from the consortium, offering $82.75 a share in cash, or about $14 billion. That compares with Marriott’s stock-and-cash offer valued at $75.91 a share, or about $12.8 billion, based on Thursday’s closing price, Bloomberg notes. 

Shares of Starwood Hotels & Resorts Worldwide dropped 5 percent in after-hours trade Thursday to $79.90 in the wake of the announcement, the Journal is reporting, but Marriott International’s stock is also down 5.7 percent to $67.50. Marriott shareholders, the paper claims, are not pleased with the latest developments.