HOT - $88.72 total value of Anbang proposal, (including IILG close price of $13.93 at 0.4289 ratio), an 8.3% premium to HOT/MAR deal which was worth $81.89 at Thursday close. HOT/MAR deal was valued ~$85.50 based on MAR closing price of $73.16 at 3/18/16 close ; MAR stock price has been under pressure since announcing amended DA on 3/21. Making up $7/share gap with cash would push P/F debt leverage (2017E EBITDA with $250M synergies) to 3.3x from 2.2x MAR standalone (2016E EBITDA). 5% deal debt interest rate would make transaction 4.5% dilutive (P/F $4.21 EPS) to MAR 2017E standalone $4.41 EPS.
MAR may bump, but can no longer say that deal is accretive unless they find even more savings. $300M synergies is 2.5% dilutive (P/F $4.30 EPS), 4.5% deal interest rate reduces that to 1.5% dilutive (P/F $4.34 EPS). That assumes MAR matches Anbang proposal.
Not that Anbang has unlimited funding, but they have a deep pocket and real estate is a hard asset and has cash flow (i.e. the hotel business) to support the investment, and is long term in nature (to match the insurance side of the equation).
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