China's Anbang Insurance Group Co. has dropped its $14 billion offer for Starwood Hotels & Resorts Worldwide Inc. citing various market considerations Thursday, potentially ending a bidding war between Anbang and Marriott International Inc.
Starwood had agreed to a $13.3 billion cash and stock deal from Marriott earlier in March, only to be trumped a week later by a higher bid by Anbang. Starwood’s Board of Directors had called Anbang’s improved offer a “superior proposal” compared to Marriott’s offer.
Starwood shares slid 4 percent post market hours after the Chinese insurance company, which was leading a consortium of potential investors, opted out of the negotiations abruptly.
Late Thursday, the Stamford, Connecticut-based Starwood said its board would go with its existing deal with Marriott, which offered Starwood shareholders $21 in cash and 0.8 shares of Marriott for each share of Starwood, valuing the company at about $77.94 per share.
Starwood shareholders who are set to vote on the deal on April 8 will own approximately 34 percent of the combined company’s common stock after completion of the merger. The transaction is expected to close in mid-2016 if all necessary approvals are received, Starwood said in a statement.
The merger of Marriott and Starwood would potentially create the world’s largest lodging company that would operate or franchise more than 5,500 hotels with 1.1 million rooms in over 100 countries across the globe.
Approximately $250 million will be trimmed from the combined annual operating expenses by uniting Starwood’s brands — which include Westin, W and St. Regis — with Marriott's two dozen brands, including Courtyard, Ritz-Carlton and Fairfield Inn.