Jan062016

Skift publishes details of Marriott-Starwood deal

Skift.com has Dennis Schaal’s The Inside Story of How Marriott Didn’t Want Starwood Until It Did, where he pieced together the Starwood Hotels acquisition puzzle story of 2015. There were other players in the 2015 speculation of which hotel chain SPG members would ultimately bed with and presumably IHG, Hyatt and the Chinese all played a role.

Basically, it all came down to the stock market.

Marriott’s stock closed at $70.93 per share August 12, 2016 when Starwood was at $75.91. Marriott had a 7% stock price gap. By October 28 that gap had been reduced by more than half to a 3.4% gap when Marriott priced at $76.89 and Starwood at $79.50. These are the numbers from the Skift piece.

What is missing from this story is how Marriott was a higher priced stock than Starwood for much of 2015. News stories of Starwood Hotels courting buyers drove Starwood stock higher in sudden bursts to levels higher than Marriott.

Starwood stock 2015-16   Marriott stock 2015-16

On Friday, November 13, the weekend before the story broke of a Marriott-Starwood Hotels deal, the stock prices were even closer.

Marriott $72.74

Starwood $74.99

A Marriott-Starwood deal was struck valued at $12.2 billion dollars. The merger creates the world’s largest hotel chain with over one million hotel rooms.

Gary Leff of View from the Wing Why Starwood Chose to Merge With Marriott Rather than Hyatt today, explains why Hyatt’s seemingly higher value offer was negated by Hyatt’s complex stock structure.

Hotel Life in a Stock Weary World

I don’t follow Wall Street closely, just general trends. Our retirement is tied up in State Teachers Pension Funds.

Out of curiosity, I looked up Marriott and Starwood stock prices today. The stock market is feeling waves from China in a major global financial adjustment to start off this first week in 2016.

At 12 noon Eastern time today, Jan 6, 2016

Starwood Stock Jan6-16      Marriott stock Jan6-16

  • Starwood $65.79 (more than 3.25% drop today).
  • Marriott $63.79 (2.21% drop today).

After proposals and counter-proposals back and forth over the next two weeks, on November 14 Marriott offered the deal that the two parties accepted: Starwood shareholders would get 0.920 shares of Marriott stock for each Starwood share they owned, plus $2 per share. There was also a $400 million termination fee if either board changed their favorable recommendation of the deal.

Skift

Kind of a numbers oddity how the two stocks were exactly $2.00 difference in price today.

Anyway, seems like there is quite a bit of money dropping out of the hotel industry as Marriott and Starwood stock prices were 20% higher two months ago when this deal was announced in November 2015.

About Ric Garrido

Ric Garrido of Monterey, California started Loyalty Traveler in 2006 for traveler education on hotel and air travel, primarily using frequent flyer and frequent guest loyalty programs for bargain travel. Loyalty Traveler joined BoardingArea.com in 2008.

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Comments

  1. If you believe the deal will close it seems like you should be shorting Starwood stock, since each share will only get .92 Marriott shares + $2. So the gap SHOULD BE greater than $2 here. Starwood appears overpriced… by about gap in the Hyatt offer!

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