Starwood agrees to "superior" Anbang deal; bidding war may be on cards

Starwood Hotels & Resorts announced plans to end its deal with Marriott Hotels in favour of what it deemed to be a better offer from a consortium led by China’s Anbang Insurance Group.

Earlier this week, Starwood shares surged after the company said it had received an unsolicited buyout bid from a consortium at $76 per share.

On Friday, the company said it had determined that Anbang’s sweetened offer of $78 per share in cash or around $13,2bn – which is already full financed – was a “superior proposal”.

Under the terms of the consortium’s proposal, Starwood shareholders would also receive consideration in the form of Interval Leisure Group common stock from the previously-announced spinoff of its vacation ownership business, Vistana Signature Experiences, and subsequent merger with ILG, currently valued at around $5.67 per Starwood share.

On this basis, the consortium proposal and the ILG transaction have a current value of $83.67 per share, Starwood said.

The consortium includes JC Flowers & Co and Primavera Capital Limited.

Marriott, which has been notified by Starwood of its plans to end the deal, now has until 28 March to pull a better deal out of the bag.

“Starwood will negotiate in good faith with Marriott during this period, and the Starwood Board will consider in good faith any changes to the Marriott agreement that Marriott may propose during this period.”

Marriott Hotels responded to the news by saying that it was is in the process of reviewing the Anbang consortium's proposal and was “carefully considering its alternatives”.

If Starwood terminates the Marriott merger agreement in favour of the Anbang deal it will have to pay Marriott a termination fee of $400m in cash.

Starwood shares were up 5% to $80.25 in pre-market trade.