In the final stages of the duel between the Anbang-led investor group and Marriott to acquire Starwood Hotels & Resorts, two questions remain. The first is whether Marriott will counter Anbang’s latest offer with a higher-value offer of its own. The second is which of the two outstanding offers Starwood stockholders will vote to accept at the company’s shareholder meeting on April 8.
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As to the likelihood of Marriott’s sweetening its offer, worth around $13.6 billion depending on the price of Marriott shares, Marriott’s latest news release sends a strong “No!” signal. Which raises the question: Why would Starwood prefer Marriott’s lower cash-and-stock bid over Anbang’s $13.8 billion all-cash offer?
As it has since the bidding began, Marriott is standing by its long-term value argument: “The combined company will offer stockholders significant equity upside and greater long-term value driven by a larger global footprint, wider choice of brands for consumers, substantial revenue synergies, and improved economics to owners and franchisees leading to accelerated global growth and continued strong returns.”
In addition, Marriott has called into question Anbang’s ability to finance the deal, and warned of possible regulatory hurdles:
Starwood stockholders should give serious consideration to the question of whether the Anbang-led consortium will be able to close the proposed transaction, with a particular focus on the certainty of the consortium’s financing and the timing of any required regulatory approvals.
In the larger picture, financing and government scrutiny are probably non-issues. The Anbang group has deep pockets, and whatever security concerns there may be only affect a select few properties. What shareholders will be weighing is the value of more cash up front versus the potential for higher value in the long term.
A bird in hand versus two (maybe) in the bush. It’s that simple. Or that complicated.
Reader Reality Check
If you were a Starwood shareholder, how would you vote?
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After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.