Starwood Hotels & Resorts Worldwide Inc., whose chief executive officer resigned in February amid slow growth, said it’s exploring strategic and financial alternatives to increase shareholder value.
Starwood hired Lazard Ltd. to help in the effort and said it doesn’t plan to make any other comments on the review until it is complete, according to a statement by the Stamford, Connecticut-based company on Wednesday. The shares jumped 9.1 percent to $88.14 at 8:34 a.m. New York time, before the start of regular trading.
“No option is off the table, and we will take the time we need to thoroughly evaluate our opportunities and achieve the best result for our shareholders, business partners, and associates,” Bruce Duncan, Starwood’s chairman, said in the statement.
Former CEO Frits van Paasschen, who resigned in February, was slow to expand through brand additions to reach new markets or add hotels in existing ones, according to Nikhil Bhalla, an analyst at FBR & Co. The hotel company said in February that it needed new leadership to “accelerate Starwood’s growth, improve performance and sharpen our focus” on operations.
The company, which owns such names as Sheraton, W and St. Regis, is now led by Adam Aron. Two weeks ago, Starwood announced a new brand, Tribute Portfolio, to help it expand globally.
By saying no option is off the table, Starwood is “indicating a potential sale of the company is possible,” Ryan Meliker, an analyst at MLV & Co., wrote in a note to clients. “We believe the company could be worth well above $100 per share to a strategic or leveraged buyer.”
Starwood also reported first-quarter results Wednesday. The company projected adjusted earnings per share for the full year to be $2.94 to $3.04 a share, compared with an average analyst estimate of $2.95 a share.
The company has been lagging behind some competitors. Starwood’s first-quarter revenue slipped 2.9 percent to $1.42 billion, compared with an increase of 10 percent at Hilton Worldwide Holdings Inc.
“Looking ahead, we are taking meaningful steps to accelerate the pace of our growth,” Aron said in the earnings statement. “The recent launch of our 10th brand – Tribute Portfolio – is just one of several key initiatives that we will be launching in the near term as we look to expand our footprint and better serve our guests.”