The saga of the Starwood takeover continued on Monday as the Chinese group led by insurer Anbang made a new offer of $14 billion. The new all-cash purchase price of $82.75 per share trumps the revised offer made by Marriott last week. Shares of Starwood were up more than 2 percent during trading hours Monday.
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Both offers exclude any value associated with HOT’s pending timeshare transaction. At this point, we have to think that an upwardly revised offer from MAR will likely result in 2017/2018 EPS dilution and thus may
prove challenging in securing MAR shareholder (or even its own Board) approval, assuming the offer from Anbang moves from non-binding to binding, and thus see a likely end result of MAR walking away from this
process and simply collecting its $450m break-up fee.
We view this news as a positive for both HOT and MAR, as HOT shareholder’s would receive 9% more for their shares vs. Marriot’s bid (based on market close on 03/25/2016) and MAR would receive $450 million plus an additional $18 million in termination related fees.
– We continue to believe that MAR is at a disadvantage bidding against Anbang, given our view that Anbang is an uneconomic buyer looking to get money out of China and into a the less volatile US market.
The consortium of bidders led by Anbang Insurance Group Co., Ltd. increased its non-binding offer to $82.75/share, in cash, for the hotel portion of HOT. HOT shareholders should also receive ~$5.91 of
consideration from IILG for HOT’s timeshare business. The total consideration offered for HOT is now $88-$89/share dependent on where IILG shares are trading, which implies a total EV/EBITDA valuation of 12.3x 2016E and 11.5x 2017E including timeshare EBITDA.
See the following visualizations which highlight relevant financial figures regarding the Starwood buyout battle.
Starwood Hotels & Resorts Worldwide Inc. (HOT) Stock Price – Current Day
Starwood vs Marriott Stock Price – 1-Month Returns
HOT vs MAR