Anbang ups the ante, puts pressure on Marriott's Starwood bid


The ball is back in Marriott's court. After a consortium consisting of Anbang Insurance Group Co., J.C. Flowers & Co. and Primavera Capital Limited submitted a significantly higher bid to acquire Starwood Hotels & Resorts Worldwide than what Marriott International had offered back in November, the Starwood Board of Directors has decided that the new bid constitutes a “Superior Proposal.”

Under the terms of the Consortium’s proposal, which contains definitive documentation, the Consortium would acquire all of the outstanding shares of common stock of Starwood for $78 per share in cash, an increase from the $76 per share proposal made by the Consortium last week. 

As such, the Board now intends to terminate the Marriott merger agreement and enter into a definitive agreement with the Consortium. 

But this doesn't mean that Marriott is out of the running just yet: Under the terms of the Marriott merger agreement, Marriott has the right until 11:59 p.m. ET on March 28 to negotiate revisions to their merger agreement with Starwood and, essentially, outbid Anbang and the other members of the consortium. In a statement, Starwood said that it will "negotiate in good faith with Marriott during this period, and the Starwood Board will consider in good faith any changes to the Marriott agreement that Marriott may propose during this period."

In a statement, Marriott said that it still believes "that a combination of Marriott and Starwood is the best course for both companies and offers the best value to Starwood shareholders." Marriott is in the process of reviewing the Anbang consortium’s proposal and is "carefully considering its alternatives." The company is considering postponing its Special Meeting of Stockholders which is currently scheduled for March 28.

If Starwood terminates the Marriott merger agreement in order to accept the consortium proposal, Starwood must pay Marriott a termination fee of $400 million in cash. It is worth noting that Starwood’s Board has not changed its recommendation in support of Starwood’s merger with Marriott.

Sources told CNBC that Marriott plans to make a counter-bid.

With a bidding war on the cards, shares quickly passed the Anbang offer price. Starwood's stock rose 4.7 percent to $80 in early trading.