Starwood Deems Anbang Consortium Proposal ‘Superior’

STAMFORD, CT—Starwood Hotels & Resorts Worldwide, Inc. has received a revised binding and fully financed proposal from a consortium consisting of Anbang Insurance Group Co., Ltd., J.C. Flowers & Co. and Primavera Capital Limited that its board of directors, in consultation with its legal and financial advisors, has determined constitutes a “Superior Proposal,” as defined in Starwood’s merger agreement with Marriott International, Inc.

Starwood has notified Marriott that it had received the binding proposal from the consortium that its board has determined constitutes a “Superior Proposal,” and that Starwood’s board intends to terminate the Marriott merger agreement and enter into a definitive agreement with the consortium. Consistent with the terms of the Marriott merger agreement, Marriott has the right until 11:59 p.m. ET on March 28 to negotiate revisions to the existing merger agreement between Marriott and Starwood so that the proposal from the consortium no longer constitutes a “Superior Proposal.” 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.

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Under the terms of the consortium’s proposal, which contains definitive documentation, it would acquire all of the outstanding shares of common stock of Starwood for $78 per share in cash, an increase from the $76 per share proposal made by the consortium on March 10. Pursuant to separate agreements entered into by Starwood, Starwood stockholders would additionally receive consideration in the form of Interval Leisure Group (ILG) common stock from the previously announced spin-off of its vacation ownership business, Vistana Signature Experiences, and subsequent merger with ILG, currently valued at approximately $5.67 per Starwood share, based on the 20-day VWAP (volume weighted average price) of ILG common stock ending March 17. On this basis, the consortium proposal and the ILG transaction have a current value of $83.67 per share. The Starwood board believes that the binding and fully financed proposal from the consortium provides a high degree of closing certainty.

Under the terms of the merger agreement with Marriott, Starwood stockholders would receive 0.92 shares of Marriott International, Inc. Class A common stock and $2 in cash for each share of Starwood common stock. Based on Marriott’s 20-day VWAP ending March 17, the merger transaction has a current value of $65.33 per Starwood share, including the $2 cash per share consideration. Starwood stockholders will separately receive consideration from the spin-off of the Starwood timeshare business and subsequent merger with ILG of approximately $5.67 per Starwood share, based on the 20-day VWAP of ILG common stock ending March 17. On that basis, the merger with Marriott and the ILG transaction have a current value of $71.00 per share.

Starwood is not permitted to terminate the Marriott agreement to enter into the consortium’s binding agreement unless the Starwood board has determined that the consortium’s offer continues to be a “Superior Proposal” once the negotiation period with Marriott has concluded, and taking into account any revisions to the existing Marriott agreement proposed during this period. The consortium has confirmed that its offer will remain outstanding until the expiration of Marriott’s negotiation period.

In light of these developments and the resulting need for Starwood to be able to provide sufficient time for the filing or mailing of additional information regarding these developments to its stockholders, Starwood is postponing its Special Meeting of Stockholders, which was to be held on March 28, to a date that will be established after consultation with Marriott. Starwood’s board has not changed its recommendation in support of Starwood’s merger with Marriott.

Lazard and Citigroup are serving as financial advisors, and Cravath, Swaine & Moore LLP is serving as legal counsel to Starwood.