rocky
TUG Member
April 2, 2007 2:37 p.m. EDT
Starwood CEO's Departure
Prompts Buyout Speculation
Associated Press
April 2, 2007 2:37 p.m.
NEW YORK – Steven Heyer's abrupt resignation Monday as chief executive of Starwood Hotels & Resorts Worldwide Inc. is raising speculation that the lodging giant could be sold.
"Change in leadership may serve as a catalyst for Starwood to explore the possibility of an outright sale," Citigroup analyst Joshua Attie wrote in a Monday morning note to investors. "We have no specific knowledge of a transaction, but the environment seems right in which to sell the company."
Goldman Sachs analyst Steven Kent concurs. He said there has been speculation for the past year that Starwood could be a target for a private equity takeover. Mr. Heyer's sudden departure and the resulting lack of a permanent CEO could signal to investors that a buyout is more likely now than before and send the share price higher.
In midday trading Monday, Starwood shares rose $2.58, or 3.9%, to $67.43 on the New York Stock Exchange.
Starwood said it was Mr. Heyer's management style and not his overall performance that led to his departure, and cited his way of doing business as causing the board "to lose confidence in his leadership." The move to oust Mr. Heyer, 54 years old, who had a year and a half remaining on his four-year employment contract, came after a weekend board meeting that focused more on the executive's personality than his performance.
In a statement Monday, Mr. Heyer said, "I was asked to lead the company through a complex transition and at the same time create an exciting platform for future growth. I am proud of what we have accomplished in the last 2-1/2 years and believe Bruce Duncan and the team will continue to execute Starwood's strategy with distinction."
CONFERENCE CALL
1
"We do not expect any other management changes and there will be no strategic changes in the coming months, just sustained focus on implementing the successful plan we have in place." – Starwood Chairman Bruce Duncan
• Read the transcript2 of Starwood's conference call, provided by Thomson StreetEvents (www.StreetEvents.com3)
• Starwood CEO Heyer to Leave4
The change comes as Starwood and its rivals in the lodging business continue to enjoy heady times, as both business and leisure travelers fill hotel rooms world-wide. The industry is experiencing rapid growth in Asia, India and parts of the Middle East. Travelers have been willing to pay high nightly rates in many cities around the world, boosting the fortunes of hoteliers since the industry recovered in earnest from the Sept. 11 terrorist attacks.
When asked on Monday about the sale rumors, Chairman Bruce W. Duncan, who will serve as interim CEO, said, "We think we have a great future as a public company. We have a great strategy in place …we're going to execute on that strategy." Mr. Duncan will move from Chicago to the company's White Plains, N.Y., headquarters while the company conducts a for a new permanent CEO.
Mr. Heyer had refused to move to Starwood headquarters, instead staying in Atlanta and commuting via private jet. He often defended the practice, saying that his job required so much travel that it didn't matter where he was based. Investors and analysts long complained that Mr. Heyer was inaccessible to them, except for quarterly conference calls.
Starwood operates hotels under the brand names St. Regis, Sheraton, Westin, W Hotels, Aloft and Element. The company has more than 400 hotels, or about 100,000 rooms, in its active pipeline.
The company now has an opportunity to hire a CEO who is more friendly to Wall Street. Mr. Heyer's "public persona" did little to help the company's share performance, said Raymond James & Associates Inc. analyst William Crow.
"He's a very serious guy, very workmanlike," Mr. Crow said. "His predecessor had done much of the marketing and legwork with investors."
Since Mr. Heyer received no severance or no stock grants, Mr. Crow believes there's more to Mr. Heyer's departure than what the company has let on.
Stephen Quazzo, chairman of the governance and nominating committee of the Starwood Board, said Monday, "While the board appreciates the good work Steve Heyer has done to position Starwood for the future, issues with regard to his management style have led us to lose confidence in his leadership."
In fact, people close to the situation said Starwood plans to move forward with many of Mr. Heyer's initiatives. Mr. Quazzo said the company has no plans to change its strategy of further developing its fee-based franchise business and selling off some real-estate assets.
Mr. Heyer had been CEO and a director at Starwood since October 2004, and is leaving both posts. Mr. Duncan has been Starwood's chairman since 2005 and a board member for more than a decade.
Starwood also announced that Chief Marketing Officer Javier Benito is also leaving the company, which Mr. Quazzo said is unrelated to Mr. Heyer's departure.
As it announced the executive departures, Starwood reaffirmed its first-quarter and full-year guidance, calling for full-year profit of about $2.50 per share and a quarterly profit of 38 cents per share.
Starwood CEO's Departure
Prompts Buyout Speculation
Associated Press
April 2, 2007 2:37 p.m.
NEW YORK – Steven Heyer's abrupt resignation Monday as chief executive of Starwood Hotels & Resorts Worldwide Inc. is raising speculation that the lodging giant could be sold.
"Change in leadership may serve as a catalyst for Starwood to explore the possibility of an outright sale," Citigroup analyst Joshua Attie wrote in a Monday morning note to investors. "We have no specific knowledge of a transaction, but the environment seems right in which to sell the company."
Goldman Sachs analyst Steven Kent concurs. He said there has been speculation for the past year that Starwood could be a target for a private equity takeover. Mr. Heyer's sudden departure and the resulting lack of a permanent CEO could signal to investors that a buyout is more likely now than before and send the share price higher.
In midday trading Monday, Starwood shares rose $2.58, or 3.9%, to $67.43 on the New York Stock Exchange.
Starwood said it was Mr. Heyer's management style and not his overall performance that led to his departure, and cited his way of doing business as causing the board "to lose confidence in his leadership." The move to oust Mr. Heyer, 54 years old, who had a year and a half remaining on his four-year employment contract, came after a weekend board meeting that focused more on the executive's personality than his performance.
In a statement Monday, Mr. Heyer said, "I was asked to lead the company through a complex transition and at the same time create an exciting platform for future growth. I am proud of what we have accomplished in the last 2-1/2 years and believe Bruce Duncan and the team will continue to execute Starwood's strategy with distinction."
CONFERENCE CALL
1
"We do not expect any other management changes and there will be no strategic changes in the coming months, just sustained focus on implementing the successful plan we have in place." – Starwood Chairman Bruce Duncan
• Read the transcript2 of Starwood's conference call, provided by Thomson StreetEvents (www.StreetEvents.com3)
• Starwood CEO Heyer to Leave4
The change comes as Starwood and its rivals in the lodging business continue to enjoy heady times, as both business and leisure travelers fill hotel rooms world-wide. The industry is experiencing rapid growth in Asia, India and parts of the Middle East. Travelers have been willing to pay high nightly rates in many cities around the world, boosting the fortunes of hoteliers since the industry recovered in earnest from the Sept. 11 terrorist attacks.
When asked on Monday about the sale rumors, Chairman Bruce W. Duncan, who will serve as interim CEO, said, "We think we have a great future as a public company. We have a great strategy in place …we're going to execute on that strategy." Mr. Duncan will move from Chicago to the company's White Plains, N.Y., headquarters while the company conducts a for a new permanent CEO.
Mr. Heyer had refused to move to Starwood headquarters, instead staying in Atlanta and commuting via private jet. He often defended the practice, saying that his job required so much travel that it didn't matter where he was based. Investors and analysts long complained that Mr. Heyer was inaccessible to them, except for quarterly conference calls.
Starwood operates hotels under the brand names St. Regis, Sheraton, Westin, W Hotels, Aloft and Element. The company has more than 400 hotels, or about 100,000 rooms, in its active pipeline.
The company now has an opportunity to hire a CEO who is more friendly to Wall Street. Mr. Heyer's "public persona" did little to help the company's share performance, said Raymond James & Associates Inc. analyst William Crow.
"He's a very serious guy, very workmanlike," Mr. Crow said. "His predecessor had done much of the marketing and legwork with investors."
Since Mr. Heyer received no severance or no stock grants, Mr. Crow believes there's more to Mr. Heyer's departure than what the company has let on.
Stephen Quazzo, chairman of the governance and nominating committee of the Starwood Board, said Monday, "While the board appreciates the good work Steve Heyer has done to position Starwood for the future, issues with regard to his management style have led us to lose confidence in his leadership."
In fact, people close to the situation said Starwood plans to move forward with many of Mr. Heyer's initiatives. Mr. Quazzo said the company has no plans to change its strategy of further developing its fee-based franchise business and selling off some real-estate assets.
Mr. Heyer had been CEO and a director at Starwood since October 2004, and is leaving both posts. Mr. Duncan has been Starwood's chairman since 2005 and a board member for more than a decade.
Starwood also announced that Chief Marketing Officer Javier Benito is also leaving the company, which Mr. Quazzo said is unrelated to Mr. Heyer's departure.
As it announced the executive departures, Starwood reaffirmed its first-quarter and full-year guidance, calling for full-year profit of about $2.50 per share and a quarterly profit of 38 cents per share.
