Anbang-Led Consortium Withdraws Proposal for Starwood Hotels & Resorts

The consortium consisting of Anbang Insurance Group Co., Ltd., J.C. Flowers & Co. and Primavera Capital Limited has informed Starwood Hotels and Resorts that, as a result of market considerations, it has withdrawn its non-binding proposal to acquire all of the outstanding shares of common stock of Starwood for $82.75 per share in cash and does not intend to make another proposal.

That leaves Marriott, a company that because of the consortium’s involvement, is now paying much more than it had originally intended.

Starwood says its Board of Directors unanimously supports the merger with Marriott International which will create the largest hospitality company in the world.

Bruce Duncan, Chairman of Starwood’s Board, said, “Throughout this process, we have been focused on maximizing stockholder value now and in the future. 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. We continue to be very excited about the combination of our two companies and are committed to completing this deal in an expeditious manner. We are confident Starwood stockholders will support a merger that will create the world’s best and biggest hotel company and which offers significant long-term upside for not only our stockholders, but also our company and associates.”

Under the terms of the amended merger agreement, as announced on 21 March 2016, Starwood shareholders will receive $21.00 in cash and 0.80 shares of Marriott Class A common stock for each share of Starwood common stock. Excluding Starwood’s timeshare business, the transaction values Starwood at approximately $13.3 billion ($77.94 per share), consisting of $9.7 billion of Marriott stock, based on the closing price of $71.18 on 31 March 2016, and $3.6 billion of cash, based on approximately 170 million outstanding Starwood shares. Starwood shareholders will own approximately 34% of the combined company’s common stock after completion of the merger, based on current shares outstanding.

Starwood stockholders will separately receive consideration in the form of Interval Leisure Group (ILG) common stock from the spin-off of the Starwood timeshare business and subsequent merger with ILG, currently valued at $6.13 per Starwood share, based on ILG’s share price as of market close on 31 March 2016. The amended agreement and the ILG transaction have a combined current value of $84.07 per share of Starwood common stock.

Arne Sorenson, president and chief executive officer, Marriott International, said, “We are focused on maximizing shareholder value and from the beginning of this process we have been steadfast in our belief that a combination with Starwood will offer the highest value to all shareholders. 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. Our integration teams have been diligent in their work over the last few weeks and are more committed than ever to a timely and smooth transition.”

The special meeting of Starwood stockholders to vote on and approve the Marriott-Starwood merger agreement will be held as scheduled on Friday, 8 April 2016 at 10:00 a.m. Eastern Time at the Sheraton Stamford Hotel.

Lazard and Citigroup are serving as financial advisors and Cravath, Swaine & Moore LLP is serving as legal counsel to Starwood.

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