Fortune
Power Sheet – April 1, 2016
Geoff Colvin, Ryan Derousseau
Updated

The fight for Starwood is apparently over, but the story of what happened has yet to be told. We've been following this saga since Wu Xiaohui, CEO of China's mysterious Anbang Insurance Group, disrupted a friendly deal for Marriott International to buy Starwood Hotels and Resorts just a few weeks before shareholders were scheduled to vote on it last Monday. Wu offered to pay a higher price than Marriott was paying; Marriott CEO Arne Sorenson then topped Wu's bid; Wu topped Sorenson - and then late yesterday withdrew his offer. It appears that Sorenson's last offer, which the Starwood board under chairman Bruce Duncan had accepted, is now good enough to buy Starwood. Unless some entirely new bidder jumps in.

But what really happened and why? Starwood had not accepted Wu's latest offer; the company said it was discussing it with Anbang. Maybe the two sides couldn't agree on terms separate from the price. Or maybe the Chinese government quashed the deal. It certainly seemed odd that this insurance company was making such rich all-cash offers, and you couldn't help wondering if its investors were just trying to move their money out of the country and out of the yuan. Xi Jinping's government would not have liked that.

Assuming a Marriott-Starwood deal actually closes, Sorenson's leadership challenges will be only beginning. Investors fear that he's paying too much; Marriott stock rose when Anbang topped his offer a few days ago, and it fell when Anbang withdrew from the auction yesterday. Sorenson will have to lead a massive integration while finding more synergies and cost reductions than he budgeted for in making the original deal last fall.

Most of the media are reporting that Sorenson won the bidding war. But in fact we don't know yet. No deal is a victory if it's so expensive that it fails to create value for the acquirer's shareholders. Sorenson has been a terrific leader of Marriott so far. He'll need everything he's got as he assembles and leads the world's largest hotel company.

A quick note:

I was intrigued by PepsiCo's promotion Wednesday of Al Carey to a new position running the company's beverage and snack businesses in North America. Some analysts immediately made him the frontrunner to succeed CEO Indra Nooyi. Speculating on Nooyi's successor has been a popular game since at least 2011, when she was under heavy pressure from activist investor Nelson Peltz to separate the snack business (Frito-Lay) from its beverage business. When I spoke with several PepsiCo executives back then, many of them made similar remarks, unprompted, along the lines of "People in this company would walk through walls for Al Carey." Yet he wasn't on anyone's list of potential successors, probably because he's four years older than Nooyi; she's now 60, and he's 64.

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