Marriott International Inc. has reached an agreement with Starwood Hotels & Resorts Worldwide Inc. for a $13.6 billion merger. The deal emerged in the bidding war between Marriott and a group led by China's Anbang Insurance Group.
Under the new proposal imposed by Marriot, shareholders will get $21 per share. The total bid also includes stock, at $79.53 as of Friday's close of trading, as reported by Reuters. In addition to the $21 cash per share, Starwood shareholders will also receive 0.8 shares of Marriott Class A common stock for each of Starwood common stock.
The original cash portions agreed between the two companies in November was $2 a share, added with 0.92 shares of Marriott stock. That would result in $11.7 billion based on Friday's close. Anbang's last offer was $78 a share that would total in $13.2 billion, a counteroffer from Marriott's previous $65.33 a share. The new deal's total worth is $13.6 billion per Friday.
Anbang's latest counteroffer has raised the bar in the bidding war to merge with Starwood. Starwood chairman Bruce Duncan told The Wall Street Journal how the company is pleased with the new offer by Marriott. "We are pleased that Marriott has recognized the value that Starwood brings to this merger and enhanced the consideration being paid to Starwood shareholders," Duncan stated.
A research director for Bloomberg, Tim Craighead, noted the value of the merger between the two prominent companies. "A Marriott-Starwood combination would create a diversified, asset-light lodging behemoth focused on expanding its base of fees and managed and franchised hotels. A takeover by Anbang Insurance may cloud the long-term growth picture," he said.
It's also noted that Marriott-Starwood combination would create the world's largest hotel company with about 30 brands and 5,500 hotels. The merger could create more leverage in partnership with travel agents, create a larger frequent-guest loyalty program, as well as save cost. In a statement, Marriott said that it expects to save about $250 million a year with a merger, more than the previous one made in November with the initial deal.
Marriott has shown its confident in rising the offer to counter Anbang's latest offer. In Monday's afternoon trading, Starwood shares were up 4 percent at $83.79. However, Marriott was down 1.6 percent at $72.02.
The new $13.6 billion merger deal offered by Marriott will likely be closed, creating the world's largest hotel chain along with Starwood. The deal ends a bidding war against a group led by China's Anbang. For now, the merger is waiting for approvals from the European Union and China officials.
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