Analyzing the Key Events before the Marriott-Starwood Merger

Chronology of events

On April 29, 2015, Starwood Hotels (HOT) put itself up for sale. On August 29, 2015, Anbang offered to buy Starwood at a 20% all-cash premium deal on Starwood’s last closing price. Its last closing price was $73.29 on August 28.

Analyzing the Key Events before the Marriott-Starwood Merger

The deal valued Starwood at $14.65 billion. Starwood asked Anbang for details on deal financing—it didn’t provide the details. On September 2, 2015, Starwood and Anbang entered a confidentiality agreement.

On November 3, 2015, Anbang made another all-cash deal to buy Starwood. It valued it at $13.8 billion–$14.3 billion. Anbang failed to provide financing details and had to withdraw the deal.

On November 14, 2015, Marriott (MAR) offered to buy Starwood at $12.2 billion. This was a stock and cash deal with Starwood’s shareholders receiving 0.92 shares of Marriott stock plus $2 cash for each share of Starwood.

On November 16, 2015, Starwood announced its merger agreement with Marriott. The merger included a termination fee of $400 million if either party decided to cancel the deal.

On March 1, 2016, Starwood and Marriott announced the clearance of antitrust laws in Canada and the US. This was generally thought to be a done deal with the shareholder vote scheduled for March 28, 2016.

All of that changed on March 10, 2016, when Anbang made another offer for Starwood. It was an all-cash deal valuing Starwood at $13 billion or $76 per share. On March 18, Starwood accepted Anbang’s offer.

On the same day, Marriott upped its offer. It valued each Starwood share at 0.8 shares of Marriott stock and $20 cash. It increased the termination fee to $600 million. Later, it increased to 0.8 shares of Marriott stock and $21 cash or $13.6 billion. The termination fee was reduced to $450 million plus $18 million of merger costs if the deal was canceled. Marriott justified the deal by claiming higher synergies. On March 20, 2016, Starwood accepted Marriott’s new offer.

On March 28, 2016, China’s Anbang Group upped its offer to $14 billion or $82.75 per share. Three days after this offer, Anbang officially withdrew its offer. It blamed unspecified market conditions.

This left Marriott with a $13.6 billion victory.

The iShares Russell 1000 Growth ETF (IWF) invests Marriott (MAR), Wyndham (WYN), and Hilton Worldwide (HLT).