Starwood Hotels & Resorts has accepted a revised $13.6
billion merger agreement with Marriott International, shrugging off the $13.2
all-cash offer it accepted from a Chinese consortium on Friday.
Starwood and Marriott announced Monday morning they signed a
revised merger agreement in which Starwood shareholders would receive $21 cash
per share and 0.8 shares of Marriott common stock for each share of Starwood
common stock. The deal would make Marriott the largest hotel company in the
world, comprised of 30 brands, 5,700 hotels and 1.1 million rooms in more than
100 countries.
"We have outlined our interest in Starwood over the
last five months in presentations and in our proxy statements," Marriott
CEO Arne Sorenson said in a conference call Monday morning. "In our further
diligence we have completed in the last five months, we have become even more
convinced of the tremendous opportunity presented by this merger. That
confidence is reflected in our higher offer."
Though Starwood accepted the offer from the consortium, led
by Anbang Insurance Group Co., as a "superior deal," such a merger
would have to pass through international regulatory approvals, as well as
approval in the United States, a hurdle the Marriott-Starwood merger deal already has cleared. Marriott CFO Leeny Oberg said processes for approval in the
European Union and China are on their way and still pending.
Marriott and Starwood rescheduled the respective
stockholder meetings in which they'll vote on the merger to April 8, 2016. The companies
still expect the transaction to close in mid-2016. The revised agreement also
increases the break-up fee Starwood would be required to pay Marriott to $450
million from $400 million.
Sales Integration
Sorenson gave a bit more color during the call on the Starwood
sales integration.
"We've got great relationships with our corporate
accounts that we can continue to streamline and make work better,"
Sorenson said. "We think we will have greater coverage and more efficient
coverage."
In the investor presentation, Marriott said the sales
integration would benefit Starwood hotels through Marriott’s expertise in
corporate, group and midmarket accounts.