Marriott-Starwood Merger Back On

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.