Starwood Hotels & Resorts Worldwide has agreed to an improved $13.6b (£9.5b) from Marriott International that beats last week's last-gasp bid from China's Anbang Insurance Group.
News of Anbang's offer emerged on Friday last week. The Chinese firm offered a "superior" $13b (£9.2b) for Starwood, in the process endangering Marriott International's chances of creating the world's biggest hotel group, having originally offered $12.2b (£8b).
"We are pleased that Marriott has recognized the value that Starwood brings to this merger and enhanced the consideration being paid to Starwood shareholders," said Starwood chairman Bruce Duncan.
Marriott said that it is confident that it will be able to achieve $250m in annual cost synergies within two years of completing the deal, up from $200m estimated in November 2015 on announcing the original merger agreement.
Arne Sorenson, president and chief executive of Marriott International, said: "We expect to accelerate the growth of Starwood's brands, leveraging Marriott's worldwide hotel development organisation and owner and franchisee relationships. On the top line, combined sales expertise and increased account coverage should drive additional customer loyalty and increase revenue. Hotel level cost savings should benefit owners and franchisees, including better efficiencies in reservations, procurement and shared services."
If Starwood terminates the Marriott merger agreement in order to accept the consortium proposal, Starwood must pay Marriott a termination fee of $450m in cash.
If it still goes ahead, the Marriott-Starwood merger would create the world's largest hotel company with a total 1.1 million rooms across more than 5,500 hotels.