The competition to buy Starwood Hotels & Resorts Worldwide Inc. (NYSE: HOT) heated up Monday morning with the announcement that Marriott International Inc. (NASDAQ: MAR) raised its offer to $13.6 billion. The new offer values Starwood at approximately $79.53 per share.
The two companies have signed an amended merger agreement that they say constitutes a superior proposal for Starwood than last week’s all-cash offer of $76 per share from a consortium led by China’s Anbang Insurance Group. Marriott’s latest offer includes $21 per share in cash and 0.80 shares of Marriott. That works out to $3.6 billion in cash and $10 billion in Marriott stock. Marriott’s original offer was valued at $10.8 billion in cash and stock.
A pending spinoff of Starwood’s timeshare business and subsequent merger with Interval Leisure Group Inc. (NASDAQ: IILG) adds $5.83 per Starwood share to the deal with Marriott. At that price, the total value of the deal to Starwood shareholders is $85.36 per share at current valuations.
The press announcement noted:
This revised agreement offers superior value for Starwood’s shareholders, the ability to close quickly, and provides value creation potential that will allow both sets of shareholders to benefit from improved financial performance. Marriott and Starwood have already obtained important regulatory consents necessary to complete the transaction, including clearing pre-merger antitrust reviews in the United States and Canada.
The two companies have agreed to convene shareholder meetings on March 28 to consider the agreement and then immediately to adjourn the meetings until April 8. Assuming that regulatory approvals are forthcoming, the deal is expected to close in the middle of this year. Starwood has agreed to pay a break-up fee of $450 million (up from $400 million) in certain, unspecified circumstances and also reimburse Marriott for up to $18 million in actual costs related to the financing of the transaction.
Starwood stock traded up about 3.8% Monday morning, at $83.62 in a 52-week range of $56.87 to $87.99.
Marriott stock traded down about 0.9%, at $72.50 in a 52-week range of $56.43 to $84.98.