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Anbang a 'very formidable and incredible counterparty,' Starwood CEO says

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Six trends shaping the industries and sectors we cover in 2021

Six trends shaping the industries and sectors we cover in 2021

Capital Markets View – January 2021


Anbang a 'very formidable and incredible counterparty,' Starwood CEO says

may nowbe out of the bidding war for StarwoodHotels & Resorts Worldwide Inc., but the reclusive Chinese insurancecompany left a strong impression on Starwood leadership.

CEO TomMangas on an April 1 conference call,held the day after the Anbang-led consortium withdrew its $14 billion bid for the lodging company, ralliedbehind Marriott International Inc.President and CEO Arne Sorenson and the Marriott-Starwood combination that is nowthe only deal on the table. But Mangas also acknowledged the prowess of Anbang'sleadership while assuring investors that Starwood did everything it could to maximizeshareholder value.

"Havingsat across the table from [Anbang] Chairman Wu [Xiaohui] and Anbang, they are avery formidable and incredible counterparty here that had delivered a superior bindingproposal," Mangas said. "And I want you to know that, having seen themin action, they're very credible. They moved mountains to persuade our board. Theymoved quickly and were incredibly shrewd in how they [worked] with us to get a dealdone quickly. So I wanted to assure that we worked in good faith to drive as much… value for this transaction for our shareholders as we could."

Mangasconfessed Starwood was "disappointed" that it couldn't "take a finalstep" with the Anbang consortium.

"Butall along our shareholders have been encouraged to support the Marriott deal,"he said. "And we continue to support the Marriott deal as the best deal forour shareholders."

Duringthe Q&A segment, Mangas confirmed that Anbang walked away from the process "amicably"and called the insurance company's leadership "consummate professionals."

Mangasalso said Anbang had offered them the same rationale behind their withdrawal thatthey had offered the market: that market conditions forced them to drop the bid.Reports had emerged that regulators had effectively thwarted Anbang's efforts, acall participant noted.

Marriott'sSorenson later sought to dispel rumors that Marriott had somehow been played bythe Anbang consortium and affirmed that the insurance company's first offer hadbeen a real one.

"Theywere absolutely real for the first proposal," Sorenson said of Anbang. "AndStarwood was terminating us. So this is not a — we were not responding to someonesimply calling on the telephone and saying, 'We need more money from you.' … They[Starwood] had negotiated, documented, shared the documentation with us and givenus a notice to terminate. And so we stepped in and offered something which we obviouslythink is still a very strong deal for Marriott shareholders."