Shares of Starwood Hotels & Resorts Worldwide Inc. rose 16% on Friday after the company agreed to notify Sam Zell's Equity Group Investments, one of its largest investors, of any asset sale or third-party takeover offer.
Starwood shares climbed $2.90 to $20.80, their highest close since Nov. 4. The shares lost 59% last year.
The hotel company said in a regulatory filing after markets closed Dec. 31 that it had entered into a confidentiality agreement with Equity Group Investments to give it the opportunity to make a counteroffer. Equity Group said in February that it owned 14.75 million shares of White Plains, N.Y.-based Starwood.
"With the stock price having fallen significantly over the past year, we suspect EGI would be interested in either upping its stake or cutting its losses," said C. Patrick Scholes, an analyst at Friedman, Billings, Ramsey & Co. "We would think intentions are to explore increasing ownership exposure."
Zell is the owner and chief executive of Tribune Co., the Chicago newspaper publisher that filed for bankruptcy less than a year after he took it private. Tribune's holdings include the Los Angeles Times and KTLA-TV Channel 5.
Starwood Chief Executive Frits van Paasschen had planned to sell more hotels to focus on managing and franchising Starwood's brands, including W, Sheraton and Westin, when the credit crisis drove down property values and made loans for commercial purchases almost impossible to obtain.
The global recession has eroded travel spending, forcing Starwood to cut jobs, shut sales centers and close restaurants early to trim costs at its hotels. The company has forecast falling profit this year and next.