By Anne Steele
Starwood Hotels & Resorts Worldwide Inc. said it has agreed to a sweetened $13.6 billion deal with Marriott International Inc. on Monday, trumping last week’s boosted bid from a group led by China’s Anbang Insurance Group Co.
In the new deal, Starwood shareholders will receive $21 in cash and 0.8 shares of Marriott for each share of Starwood. The deal values Starwood shares at $79.53, according to Friday’s closing prices.
Starwood shares closed Friday at $80.57 after Anbang swooped in and made an offer Starwood had deemed superior, saying it would pay $78 a share in cash for the firm, up from its earlier offer of $76 a share, totaling about $13.2 billion.
Marriott’s new offer significantly increases the share of cash it will pay for Starwood—the previous offer had been 0.92 share of Marriott and $2 in cash.
Shares of Starwood rose 3% premarket to $83.01 while shares of Marriott edged 1.9% lower to $71.80.
An Anbang spokesperson didn’t immediately respond to a request for comment.
Under terms of the new deal, Starwood shareholders will own about 34% of the combined company after the merger.
A deal between Marriott and Starwood would create the No. 1 hotel company globally by bringing together Starwood’s higher-end brands with Marriott’s limited-service offerings like Courtyard by Marriott and its extended-stay chain Residence Inn.
Marriott said it expects the deal to be roughly neutral to its earnings over the next two years. The company expects $100 million to $130 million in transaction-related charges as well as transition costs.
“We are pleased that Marriott has recognized the value that Starwood brings to this merger and enhanced the consideration being paid to Starwood shareholders,” said Starwood Chairman Bruce Duncan.
Anbang itself has been hungry for hotel assets, having recently agreed to buy U.S. luxury hotel owner Strategic Hotels & Resorts Inc. from Blackstone Group LP for about $6.5 billion including debt. About two years ago, Anbang struck a deal to purchase the historic Waldorf Astoria in Manhattan for nearly $2 billion.
The interest in Starwood has come amid the strategic review process it launched last year. The company has reportedly fielded interest from companies around the globe after opening the door to a sale spurred by its concerns that its growth was lagging its rivals.
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