Starwood Gets a Surprise Acquisition Bid

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It was no secret that Starwood was actively looking for a buyer back in April of 2015 when the board made an ominous statement, “Starwood to Explore Strategic and Financial Alternatives to Increase Shareholder Value”.

After that time there was a colorful parade of potential buyers, even Hilton. It was rumored that there were some Chinese firms in the running, as well as Hyatt. Much as I was disappointed that Starwood wouldn’t remain independent, I was warily ok with the takeover if Hyatt was the winner since I figured a strong loyalty program would likely remain. Hyatt and Starwood both have outstanding hotel loyalty programs in my book.

The door shut on that possibility in early November 2015, when Marriott International and Starwood Hotels & Resorts Worldwide made an announcement about the potential merger between the two companies.

Effectively creating the largest hotel company in the world, there would be 1.1 million guest rooms and 5,500 hotels. Marriott loyalists celebrated the possibility of adding some really great properties to the portfolio, while Starwood folks quietly lamented the fact that the loyalty program they loved would most likely be gutted.

The acquisition price came out to be $340 million in cash, and $11.9 billion of Marriott International stock for a total of $12.2 billion.

The shareholders were set to vote at the end of this month on March 28, 2016. It appeared that the Marriott/Starwood merger was a done deal. Just today though, a new player entered the ring

Today the surprising announcement was made that Starwood has received a new unsolicited bid from a Chinese-led investor group to the tune of $12.8 billion.

Will the extra money sway stockholders? It’s too soon to tell, but under the terms of the merger agreement as View from the Wing pointed out, there’s a $400 million breakup fee that Starwood would owe Marriott (in cash) if Starwood terminates the agreement with Marriott.

If anything, this bid shows us that Starwood is indeed highly coveted. This is getting interesting. Any other bidders?

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