HOT/MAR – We were asked where we thought MAR would trade on no deal and where HOT would trade if the current Anbang deal proposal goes definitive.
MAR could trade back to 17x-18x P/E multiple of 2017E $4.40 EPS, an estimate which is basically unchanged since the deal was announced. HOT could trade at 6%-8% gross discount to Anbang price (not same CFIUS and antitrust issues of SYT, but still need financing and possibly a large term fee deposit for CFIUS, antitrust and deal financing).
Based on a $82.50/share cash price, that is $75.90-$77.50 (with the gross discount) plus 2 HOT dividends ($0.75 total) plus $6.00/share IILG value (0.4289 ratio and $14.10 trading price) for a grand total of $$82.65-$84.25/share.
With HOT trading at $83.50 and MAR deal worth $84.20 (but likely worth less if MAR trades back to high $60s), the market appears to be pricing in a potential small cash bump from MAR ($2-$3/share at best) for it to seal the deal (or at least the upcoming shareholder vote).
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