Shares of Starwood Hotels (HOT) got a major lift Monday, topping the S&P 500 with an 8% gain, as a Chinese bidder stepped on the toes of a proposed merger with Marriott.
The investment group headed by Beijing's Anbang Insurance Group made an offer at $76 a share, a hefty premium over roughly $70 levels on Friday.
Bethesda, Md.-based Marriott International (MAR) reconfirmed its proposal to merge with Starwood -- which was first announced last November as a roughly $12 billion offer -- but the new terms may prove unreasonably costly. The stymied hotel chain faces particular difficulties given its shareholder meeting to approve the deal is only two weeks away.
"Marriott International today reaffirmed its commitment to acquire Starwood Hotels & Resorts Worldwide, to create the world's largest hotel company," Marriott said in a statement. "The combined company will offer stockholders significant equity upside and greater long-term value driven by a larger global footprint, wider choice of brands for consumers, improved economics to owners and franchisees leading to accelerated global growth and continued strong returns."
And as Real Money's Tony Owusu reported, such an impediment is only a benefit for Starwood investors, who can idly watch share prices climb as a potential bidding war foments.
"Two things are apparent following this news," Owusu wrote in a Monday report. "One is that the hotel sector's M&A market remains extremely active. Second is that China intends to be a key player in that market. How this will play out is anyone's guess, but hotel merger activity doesn't look to abate any time soon."
Meanwhile, energy names sunk to the index bottom alongside tanking crude, which fell 3.25% Monday to $37.25 a barrel, based on U.S. benchmark West Texas Intermediate.
Chesapeake Energy (CHK) and Southwestern Energy (SWN) each fell about 7% as the market for oil trembled. Shares are down 68% and 67%, respectively, for Chesapeake and Southwestern over the past 12 months, reflecting the broader trend across the oil and gas sector.