Merger mania is apparently continuing in the hotel sector. Starwood Hotels and Resorts Worldwide zoomed up more than 11% in early trading Wednesday following a report from CNBC that Hyatt Hotels is in advanced talks to acquire the iconic lodging firm.
Starwood shares traded as high as $82.83 early Wednesday, but have slipped to $78.85 as of noon ET. A deal could be announced by next Monday, according to sources with knowledge of the negotiations.
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Starwood Hotels involved in bidding war
It looks like a bidding war may be on, as the CNBC sources also allowed that at least three Chinese concerns are also interested in bidding on Starwood. Apparently, HNA Group Co., hotelier Jin Jiang International Co. and sovereign wealth fund China Investment Corp. have all requested approval from the Chinese government for approval to move ahead with offers for all or part of Starwood Hotels. Exactly who has bid, or how much is being offered for Starwood is not clear at this time.
Starwood operates a number of well-known brands, including W, Westin and St. Regis. The resort hotel firm announced earlier this spring that it was considering strategic options, including a possible sale. Interim CEO Adam Aron is the key player for Starwood in the talks, given the resignation of former chief exec Frits van Paasschen in February.
Industry analysts highlight that over the last couple of years, Starwood Hotels had fallen behind the curve in relation to rivals such as Marriott International and Hilton in growing the total number of hotels under its brands.
According to Lukas Hartwich, an analyst at Green Street Advisors, one major benefit of a takeover of Starwood by Hyatt “would definitely be the scale of the combined platforms. Combined, the two companies would have over 500,000 rooms, which would considerably close the gap between them and Hilton and Marriott.”
In a separate, unrelated announcement on Wednesday, Starwood noted its timeshare unit, Vistana Signature Experiences, is being spun off and bought by Interval Leisure Group Inc. Starwood shareholders will also own around 55% of the new, larger timeshare firm.