Starwood may be tempted by buyout after CEO exit
NEW YORK, April 3 (Reuters) - Starwood Hotels & Resorts Worldwide Inc. (HOT.N) may be tempted by the lure of buyout offers after Chief Executive Steven Heyer resigned under pressure from the board.
While a Starwood buyout has long been speculated, an offer may be "to a certain extent" more likely now, said Robert LaFleur, an analyst with Susquehanna Financial Group.
Starwood -- parent of the St. Regis, Westin and Sheraton hotel chains -- said on Monday that Heyer resigned after the company lost confidence in his management style. Chairman Bruce Duncan was named interim CEO until the board finds a permanent replacement.
While it's unclear what position Heyer had regarding a buyout, his sudden departure and the lack of an immediate permanent replacement may increase the appeal of a buyout.
Private equity firms, flush with cash, have been on an unprecedented buying spree. Travel-related companies have been on their shopping list.
In February, luxury hotelier Four Seasons Hotels Inc. FSH.TO FS.N agreed to a $3.37 billion offer from a group that included Bill Gates' Cascade Investments LLC and Saudi Prince Alwaleed bin Talal.
In December, Harrah's Entertainment Inc. HET.N, the world's No. 1 casino operator, agreed to a $17.1 billion takeover by Apollo Management and Texas Pacific Group. [TPG.UL]
Starwood is seen as attractive to private equity firms because of its substantial real estate assets, which could be spun off to pay down the debt that could be used to finance such deals. It also has relatively little debt on its balance sheet, which adds to its appeal, analysts said.
"Starwood tops everybody's list in the lodging world about a potential buyout," LaFleur said.
Alongside top private equity firms like Blackstone Group [BG.UL] and Kohlberg Kravis Roberts [KKR.UL], analysts see Starwood Capital Group Global LLC, an investment firm run by Starwood's founder Barry Sternlicht, as a potential bidder. Starwood Capital declined to comment.
For its part, Starwood said on Monday that it was upbeat about its prospects and believed its best strategy was to remain an independent public company.
Starwood shares, which have been trading at near 19-year highs amid the boom for hotel operators, have been buoyed by takeover speculation. The stock has risen 6 percent since Heyer's departure was announced.
Shares were up $1.15 at $68.97 in afternoon trading on the New York Stock Exchange.
