# Marriott has a New Rival for Acquisition of Starwood



## JIMinNC (Mar 14, 2016)

A Chinese company has submitted a rival bid for the Starwood hotels, challenging Marriott's acquisition.

http://www.cnbc.com/2016/03/14/starwood-gets-takeover-bid-of-76-a-share.html


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## mjm1 (Mar 14, 2016)

Interesting. Thanks for the post. Based on the comments, the board still supports the transaction with Marriott. I hope they do stay with it. It will be interesting to see how things turn out.

Mike


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## pedro47 (Mar 14, 2016)

JIMinNC said:


> A Chinese company has submitted a rival bid for the Starwood hotels, challenging Marriott's acquisition.
> 
> http://www.cnbc.com/2016/03/14/starwood-gets-takeover-bid-of-76-a-share.html



Is this the same the company that brought a hugh block of stock into Diamond International Resort last year?


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## CatLovers (Mar 14, 2016)

*Cautiously optimistic ...*

The takeover bid is from China's Anbang Insurance Group, which bought the Waldorf-Astoria in New York City last year for $1.95 billion.  This offer comes in at a $76/share all cash deal + spinoff of Starwood Vacations.  Compare this to the previous offer from Marriott of an (almost) one MAR share and a small cash incentive ... yeah, no brainer if you're a shareholder.   But this is still not a FIRM offer -- a bird in the hand vs. two in the bush!

Personally, as a Starwood Platinum member I see this rival takeover offer as VERY good news!  Those of us who know both the SPG and Marriott loyalty programs well would pick the SPG program any day!  And the Marriott takeover did not bode well for those who have high loyalty status with Starwood.


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## SueDonJ (Mar 14, 2016)

CatLovers said:


> The takeover bid is from China's Anbang Insurance Group, which bought the Waldorf-Astoria in New York City last year for $1.95 billion.  This offer comes in at a $76/share all cash deal + spinoff of Starwood Vacations.  Compare this to the previous offer from Marriott of an (almost) one MAR share and a small cash incentive ... yeah, no brainer if you're a shareholder.   But this is still not a FIRM offer -- a bird in the hand vs. two in the bush!
> 
> Personally, as a Starwood Platinum member I see this rival takeover offer as VERY good news!  Those of us who know both the SPG and Marriott loyalty programs well would pick the SPG program any day!  And the Marriott takeover did not bode well for those who have high loyalty status with Starwood.



It's good to note that this relates to the Marriott, Int'l bid to buy Starwood's hotel business.  Also, that Marriott Vacations Worldwide timeshare business is already a separate company from MI, and, that any takeover of Starwood's hotel business is dependent on Starwood's timeshare business being spun off/renamed Vistana Signature Experiences prior to the takeover.

This is the related thread in the Marriott forum:  Holy Moly. Marriott is acquiring Starwood [Hotel Business, not Timeshares]


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## BocaBoy (Mar 14, 2016)

CatLovers said:


> Those of us who know both the SPG and Marriott loyalty programs well would pick the SPG program any day!



I know both programs very well and I think the Marriott loyalty program is far superior.


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## BJRSanDiego (Mar 14, 2016)

CatLovers said:


> ... yeah, no brainer if you're a shareholder.



Actually, there is a big issue for a share holder and you planning on holding the new stock - - the Marriott deal is non-taxable but the Chinese deal is a taxable event.  So, in the case of the Chinese purchase, if you bought Starwood years ago and have had an appreciable gain, you may have to pay a bunch of $ in taxes.  This is true even if you continue to hold stock in the new group.  

If you are having trouble understanding this, Google "Medtronic taxable merger" - they did an inversion where the new company is now located off shore (Ireland).  Perhaps good for the company but bad for the stockholders.


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## CatLovers (Mar 14, 2016)

BJRSanDiego said:


> If you are having trouble understanding this, Google "Medtronic taxable merger" - they did an inversion where the new company is now located off shore (Ireland).  Perhaps good for the company but bad for the stockholders.



LOL, no I'm not having trouble ... I'm a CPA, this is my wheelhouse, albeit I practice mainly in Canada.  I still stand by my original comment but I suspect that it is coloured somewhat by my fondness for SPG's loyalty program vs Marriott's.  Interestingly enough, the financial markets see this new takeover bid in a very positive light ... Starwood stock climbed when the markets opened this morning.  Still early though to know whether this offer will proceed.  My fingers are crossed


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## CatLovers (Mar 14, 2016)

BocaBoy said:


> I know both programs very well and I think the Marriott loyalty program is far superior.



I think how you view it depends on how long you've had elite status in the SPG program.  I know that there was a lot of hand-wringing and moaning (myself included) on the Flyertalk forums when this was first announced.  Some cautious rejoicing happening there now.


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## jme (Mar 14, 2016)

BocaBoy said:


> I know both programs very well and I think the Marriott loyalty program is far superior.



I own both and agree with BocaBoy.


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## PHLarry (Mar 15, 2016)

There's a strong incentive for the deal to close; _"If the deal does not take place, Starwood will owe Marriott a termination fee of $400 million. The sale will also be called off if it isn’t accomplished by Dec. 21, 2016."_


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## Helios (Mar 16, 2016)

CatLovers said:


> Personally, as a Starwood Platinum member I see this rival takeover offer as VERY good news!  Those of us who know both the SPG and Marriott loyalty programs well would pick the SPG program any day!  And the Marriott takeover did not bode well for those who have high loyalty status with Starwood.



100% Agree.  SPG merging with Marriott is only good news for Marriott.  Terrible news for SPG Elite.  Plat benefits and redemption are not even close.


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## Ken555 (Mar 16, 2016)

moto x said:


> 100% Agree.  SPG merging with Marriott is only good news for Marriott.  Terrible news for SPG Elite.  Plat benefits and redemption are not even close.




Exactly. I don't care quite so much about premium benefits (I don't like suites at most domestic properties for a variety of reasons), but I do care about redemption abilities and value. I've already shifted the bulk of my not so inconsiderable business and personal expenses away from SPG AMEX to other programs. 

Marriott's sole advantage is the number of properties; unfortunately, consistently high quality isn't. Starwood also has issues at some properties, but generally I've been happier there than Marriott. And I do continue to stay at Marriotts (another next month).

Ironically, I could say the same about the timeshare products from each, as well.


Sent from my iPad


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## dsmrp (Mar 16, 2016)

Tomorrow 3/17 is last day of the waiver period Marriott gave to Starwood.
What does that mean when waiver expires?  Does Starwood have to announce they are rejecting the Anbang offer and moving forward with Marriott? or vice versa?


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## Helios (Mar 16, 2016)

Ken555 said:


> Exactly. I don't care quite so much about premium benefits (I don't like suites at most domestic properties for a variety of reasons), but I do care about redemption abilities and value. I've already shifted the bulk of my not so inconsiderable business and personal expenses away from SPG AMEX to other programs.
> 
> Marriott's sole advantage is the number of properties; unfortunately, consistently high quality isn't. Starwood also has issues at some properties, but generally I've been happier there than Marriott. And I do continue to stay at Marriotts (another next month).
> 
> ...



Agree.  International redemption will be the worst part of the merger, if it goes through (I really hope it doesn't but I think it will probably go through).  

The SPG good days at international properties, say the Gritti Palace in Venice, will probably be a far reach.  So many good properties that Marriott does not get close to.  

I also stay at Marriott and Hilton (because of lack of SPG coverage) at all their tier levels, and do not find them comparable.  I have status with them and do not find the benefits comparable either.  The Ritz (some of them) is on par with St Regis and the Luxury Collection.  With Hilton the Waldorf, Grand Wailea, etc. are nice.  But the percentage of these nice properties is not close to the SPG percentage.  

Timeshare wise, same observation.

I would really be interested in the new properties the Chinese group would bring to the table...just dreaming...


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## GaryDouglas (Mar 17, 2016)

Today's the day...

http://skift.com/2016/03/17/skift-b...rs-to-challenge-the-marriott-starwood-merger/


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## SpikeMauler (Mar 18, 2016)

Starwood signed a deal with Anbang this morning for $78 a share. Marriott has 5 days to submit a counter offer which they are expected to do.


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## lizap (Mar 19, 2016)

I am also a member of both programs and agree that Starwood's program is superior..



moto x said:


> Agree.  International redemption will be the worst part of the merger, if it goes through (I really hope it doesn't but I think it will probably go through).
> 
> The SPG good days at international properties, say the Gritti Palace in Venice, will probably be a far reach.  So many good properties that Marriott does not get close to.
> 
> ...


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## x3 skier (Mar 19, 2016)

*Bidding war likely?*

Marriott is preferred by the Board and Marriott has an opportunity to offer improved terms. http://thepointsguy.com/2016/03/mem...ail&utm_term=0_2b0b8ee2b7-0ca279c0bb-44157365

"It ain't over till it's over"

Cheers


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## GetawaysRus (Mar 19, 2016)

I think it's over.

The Chinese company is sitting on a pile of cash that is in yuan.  I think one of their main motivations in purchasing a US business is to convert those yuan into a dollar denominated investment.  I suspect that Chinese businessmen view the dollar as a far more stable currency than the yuan, and far less likely to devalue in the future.  If the Chinese economy remains weak, and if the Chinese government responds by reducing the value of the yuan in the future, a Starwood investment in dollars pays off.

So my suspicion is that it will be tough for Marriott to beat the Chinese.  Overpaying for Starwood could be a business mistake for Marriott that could take some years to recover from.  I'll be surprised if Marriott wants to get into a bidding war with the Chinese.

Anyway, this is all quite interesting to watch.  These big businesses play in a different league than all of us.


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## OutAndAbout (Mar 19, 2016)

GetawaysRus said:


> The Chinese company is sitting on a pile of cash that is in yuan.  I think one of their main motivations in purchasing a US business is to convert those yuan into a dollar denominated investment.  I suspect that Chinese businessmen view the dollar as a far more stable currency than the yuan, and far less likely to devalue in the future.  If the Chinese economy remains weak, and if the Chinese government responds by reducing the value of the yuan in the future, a Starwood investment in dollars pays off.


Spot-on assessment.


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## SueDonJ (Mar 21, 2016)

This Anbang/Starwood deal appears to be dead and the Marriott/Starwood deal back on again.  Please continue discussion about it in the ongoing thread: Holy Moly. Marriott is acquiring Starwood [Hotel Business, not Timeshares]


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## hhoope01 (Mar 21, 2016)

SueDonJ said:


> This Anbang/Starwood deal appears to be dead...


The key word in your sentence is "This".  Yes, the original offer Anbang made is no longer the superior offer, but there is nothing stopping Anbang from doing what Marriott did and make a new "better" offer.  Which I think they have until April 8th to do.


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## lizap (Mar 21, 2016)

Agreed.  Think they will do just that.  Marriott does not want to overextend itself with its offer. 




hhoope01 said:


> The key word in your sentence is "This".  Yes, the original offer Anbang made is no longer the superior offer, but there is nothing stopping Anbang from doing what Marriott did and make a new "better" offer.  Which I think they have until April 8th to do.


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## dioxide45 (Mar 21, 2016)

lizap said:


> Agreed.  Think they will do just that.  Marriott does not want to overextend itself with its offer.



Marriott is mainly just offering Marriott stock to current Starwood shareholders to pull off the deal. I think the original deal included $2 in cash in addition to x number of shares, the new one might be $8 a share. They could just keep upping the number of shares of the new combined company to increase the offer. The only thing they would be doing is diluting their shares and reducing the current Marriott stock holders overall ownership in the new company.


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## JIMinNC (Mar 22, 2016)

dioxide45 said:


> Marriott is mainly just offering Marriott stock to current Starwood shareholders to pull off the deal. I think the original deal included $2 in cash in addition to x number of shares, the new one might be $8 a share. They could just keep upping the number of shares of the new combined company to increase the offer. The only thing they would be doing is diluting their shares and reducing the current Marriott stock holders overall ownership in the new company.



Yes a stock deal does not require cash, but a heavily dilutive deal would likely be punished with a significant drop in the share price which would still place a practical limit on Marriott's price vis-a-vis the Chinese company. Large institutional investors would not stand for such a decision by management.


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## magicjourney (Mar 22, 2016)

dioxide45 said:


> Marriott is mainly just offering Marriott stock to current Starwood shareholders to pull off the deal. I think the original deal included $2 in cash in addition to x number of shares, the new one might be $8 a share. They could just keep upping the number of shares of the new combined company to increase the offer. The only thing they would be doing is diluting their shares and reducing the current Marriott stock holders overall ownership in the new company.



Marriott actually increased the cash portion to $21 from $2. Not sure if it's wise for Marriott to enter this bid war. Maybe they expect Chinese to raise their offer, so Marriott can get 50 million more breakup fee? The termination fee is 450 mil now. Otherwise it could probably be a disaster for Marriott stock.


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## taffy19 (Mar 22, 2016)

*Watch Out Marriott!*

This is what I read yesterday but the Government is looking into it and I hope that this real estate will stay in the hands of the USA.  Do we really want to sell off our very best real estate locations?



GetawaysRus said:


> I think it's over.
> 
> *The Chinese company is sitting on a pile of cash that is in yuan.*  I think one of their main motivations in purchasing a US business is to convert those yuan into a dollar denominated investment.  I suspect that Chinese businessmen view the dollar as a far more stable currency than the yuan, and far less likely to devalue in the future.  If the Chinese economy remains weak, and if the Chinese government responds by reducing the value of the yuan in the future, a Starwood investment in dollars pays off.
> 
> ...


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## hhoope01 (Mar 22, 2016)

Interesting if true:  China regulator would reject Anbang's Starwood deal


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## SMHarman (Mar 22, 2016)

iconnections said:


> This is what I read yesterday but the Government is looking into it and I hope that this real estate will stay in the hands of the USA.  Do we really want to sell off our very best real estate locations?


Starwood owns very little real estate and most is going to vistana the time share spin out. 

This is about brands and long term management contracts. 

Anbang owns hotels that when the management contracts expire could become Starwood brands but that would be a long term strategy.


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## dr.debs (Mar 26, 2016)

Any updates? Is it time to convert the SPG points to airline miles?


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## jcjl1 (Mar 31, 2016)

*Bye Bye Anbang*

http://www.marketwatch.com/story/st...of-anbang-dropping-proposed-merger-2016-03-31


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## SueDonJ (Mar 31, 2016)

CNBC 3/31/16 link:  Anbang walking away ...


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## bazzap (Mar 31, 2016)

http://www.prnewswire.com/news-rele...ote-for-merger-on-april-8-2016-300244479.html

MARRIOTT INTERNATIONAL

STARWOOD HOTELS & RESORTS WORLDWIDE

INVESTOR MEETING INVITATION 

Marriott International, Inc. (NASDAQ: MAR) and Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) today encouraged shareholders of both companies to vote in support of the proposed merger, which will create the world’s largest hotel company.  Both companies note that their renewed request for shareholder support follows Starwood’s announcement that a consortium of potential investors, led by Anbang Insurance Group, has withdrawn its alternative proposal to acquire Starwood. Marriott and Starwood will host their respective shareholder meetings on April 8, 2016.



You are invited to attend tomorrow’s investor meeting and webcast to discuss the merits of the combination.  The meeting will include remarks from Arne Sorenson, President and Chief Executive Officer, Marriott International; Thomas Mangas, President and Chief Executive Officer, Starwood Hotels & Resorts Worldwide; and Leeny Oberg, Executive Vice President and Chief Financial Officer, Marriott International.



The meeting will take place at the Marriott Marquis, 1535 Broadway, New York at 9:00 am ET Friday, April 1, 2016.  Doors will open for registration at 8:00 am ET.


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