Starwood Hotels & Resorts Worldwide Inc. accepted an improved bid from Marriott International Inc. valued at $13.6 billion, topping an offer from a group of investors led by China's Anbang Insurance Group Co.
Under the terms of the new offer, Starwood shareholders will receive $21 in cash and 0.80 shares of Marriott common stock for each Starwood share, according to a statement on Monday. Starwood shareholders will own about 34 percent of the combined company's common stock after the merger is completed, based on current shares outstanding.
Starwood, owner of brands such as Westin, W and St. Regis, received an unsolicited takeover proposal last week from a group of investors led by Anbang, almost upending a previous deal with Marriott, determined to create the world's largest hotel operator. At the time the rival offer of $76 a share in cash was made, the initial Marriott bid was worth $63.74 a share based on Marriott's 20-day average share price. The improved Marriott offer totals $79.53 a share, according to the companies.
Under the offer, Starwood shareholders would also get Interval Leisure Group stock from a previously announced spin off of vacation ownership business, Vistana Signature Experiences, and subsequent merger with.
"Combined sales expertise and increased account coverage should drive additional customer loyalty and increase revenue," said Arne Sorenson, president and chief executive officer of Marriott International. "Hotel level cost savings should benefit owners and franchisees, including better efficiencies in reservations, procurement and shared services."
A combination with Marriott would create the world's largest hotel company with about 30 brands, giving it more leverage in negotiating commissions with travel agents, a larger frequent-guest program and cost savings. Marriott said in the statement it expects to save about $250 million a year with the merger. The cost savings estimate increased by $50 million a year from the initial one made November 2015.
Marriott and Starwood have already obtained important regulatory consents necessary to complete the transaction, according to the companies.
(c) 2016, Bloomberg. Andrew Blackman and Heather Perlberg wrote this story.