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.
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