A Q&A About Starwood’s Potential Acquisition by Anbang

Mar 18, 2016

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With a merger looming, it’s been a stressful few months for SPG members and Starwood employees around the world. There have been many more questions than answers, and we’ve heard speculation from countless readers about will happen to Starpoints and the Starwood Preferred Guest program. Long story short, there are a lot of interested parties here — this is a story we’ve been following very closely.

To recap, here’s a brief timeline, including links to relevant coverage:

May 1, 2015 — Rumors of IHG preparing a bid to acquire Starwood
October 28, 2015 — Starwood CEO Adam Aron mentions the possibility of a sale during an earnings call
November 16, 2015 — Marriott announces its intention to acquire Starwood
November 20, 2015 — Marriott CEO Arne Sorenson addresses questions about Marriott and SPG
January 22, 2016 — TPG chatted SPG with Marriott’s Vice President of Loyalty
February 24, 2016 — TPG shares plans to attend a Marriott loyalty forum in Los Angeles
March 14, 2016 — Starwood and Marriott acknowledge Anbang’s bid
March 18, 2016 — Starwood accepts Anbang’s bid
March 18, 2016 — Starwood CEO Tom Mangas addresses the latest acquisition news

Clearly, it’s been a very busy day. We’ve shared developments as they’ve popped up and participated in some interviews regarding the merger, so sources close to the consortium (which includes Anbang Insurance Group, J.C. Flowers and Primavera Capital) have reached out to help address some of our (and your) questions. For now, we’re moving forward assuming the Anbang deal will go through — if Marriott manages to acquire Starwood, the outcome will likely be quite a bit different.

A Marriott acquisition isn't entirely off the table.
A Marriott acquisition isn’t entirely off the table.

The parties involved here aren’t permitted to comment on the deal, so we’ll need to keep this informal, but I do have some details to share. Note that the below answers are not direct quotes, but reflect the information we’ve received from our sources. If you have any questions of your own, I encourage you to ask away in the comments. We’ll follow up with our sources to address what we can over the next few days.

So, here are some questions we have, along with answers we’ve already received:

Question: Which companies are represented in the consortium?
Answer: The consortium includes Anbang Insurance Group, a Beijing-based insurance company, along with J.C. Flowers, a private equity firm, and Primavera Capital, a global investment firm based in China.

Q: Will Starwood’s headquarters move to China?
A: No, Starwood will maintain its current headquarters in Connecticut.

Q: Will the new owner replace Starwood managers?
A: No, Starwood executives and other associates will maintain their employment, as in the case of Anbang’s recent acquisition of the Waldorf Astoria hotel in New York.

Q: Would Starwood be required to pay a $400 million breakup fee to Marriott if it moves forward with Anbang?
A: Yes.

Q: What will become of the Starwood Preferred Guest program?
A: Starwood’s new owner will maintain the Starwood Preferred Guest program.

It's hard to deny the appeal of Starwood's portfolio.
It’s hard to deny the appeal of Starwood’s portfolio.

This last point is likely the most exciting of all for TPG readers — the group led by Anbang is committed to maintaining the Starwood Preferred Guest program as it currently stands. It’s too early to say whether that means we’ll see opportunities like SPG Moments or the Starwood Preferred Guest® Credit Card from American Express (and its occasional elevated sign-up bonuses) remain intact, but one can only hope!

I’m sure you have many more questions — please feel free to ask them in the comments section below. Over the next few days, we’ll follow up with our sources to request responses to some of the questions you leave here. And of course, stay tuned to TPG for the latest news as it develops!

What questions do you have about Anbang’s potential acquisition of Starwood?


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