Marriott And Starwood Invade Cuba

| About: Marriott International, (MAR)


Starwood gets a bump.

Sherwin-Williams buys Valspar.

IHS inverts.

Welcome to the Cuba Libre issue of M&A Daily


Starwood (HOT) signed a deal with the Cuban government to fix up and run three hotels, in the first return of US hotel chains in half a century. Marriott (NYSE:MAR) got permission from the US Treasury Department to operate hotels in Cuba, too.

Marriott and Starwood also signed an amendment to their definitive merger agreement in which Starwood holders get $21 in cash and 0.80 shares of MAR for each HOT share. In addition, HOT holders get Interval Leisure (IILG) stock from the spin-off of the Starwood timeshare business and subsequent merger with ILG. That additional consideration is valued at $5.83 per HOT share. The breakup fee was bumped from $400 million to $450 million. They also increased their targeted annual G&A cost synergies to $250 million from 200 million, according to the Starwood CEO on today's conference call.

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For more on investing in Cuba, please check out Capitalizing On Socialism -- Obama, Cuba, And A Cubano Pair Trade.


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Sherwin-Williams (NYSE:SHW) is buying Valspar (NYSE:VAL) for $113 per share in cash for a deal valued at $11.3 billion. To address regulatory risk, the price adjusts to $105 a share in cash if the regulatory authorities require the companies to divest themselves of businesses totaling more than $650 million of Valspar's 2015 revenue. If required divestitures total over $1.5 billion, then the buyer can walk. The deal price is 15x estimated 2016 EBITDA. The buyer expects $280 million of annual synergies within two years of closing. The long-term synergy target is $320 million. Citigroup (NYSE:C) fully committed bridge financing. If they get the full deal price in a year, the $9.88 net arbitrage spread offers a 9% annual return.


The NorthStar Asset Management (NYSE:NSAM) board formed a special committee comprised of the three NSAM independent directors to continue the previously announced strategic alternatives process. They also hired financial advisors.


IHS (IHS) and Markit (MRKT) signed an all-share merger agreement. IHS shareholders get 3.5566 MRKT per IHS share.

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Baker Hughes

The Halliburton (NYSE:HAL) acquisition of Baker Hughes (NYSE:BHI) was delayed for a third time by European Union regulators who stopped their review because the filers have not yet supplied key data about the deal.


Thermo Fisher (NYSE:TMO) agrees with the Affymetrix (NASDAQ:AFFX) board of directors that the Origin proposal is not superior to the current deal. Thermo Fisher believes that the current merger agreement is in the best interests of Affymetrix holders. More to come in future editions of M&A Daily…

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Disclosure: I am/we are long HOT, MHGC, AGN.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Chris DeMuth Jr and Andrew Walker are portfolio managers at Rangeley Capital. Rangeley invests with a margin of safety by buying securities at deep discounts to their intrinsic value and unlocking that value through corporate events. In order to maximize total returns for our investors, we reserve the right to make investment decisions regarding any security without further notification except where such notification is required by law.

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