Who is Samuel Zell? Why has news of him working with Starwood Hotels sent the stock through the roof?
According to Forbes, Starwood (Ticker: HOT) and Zell’s private investment firm, Equity Group Investments, signed a confidentiality agreement last week. The firm already owns 8 percent of Starwood’s stock.
Agreements like this usually precede M& A activity. As such, the prospect of a deal between the two sent shares of Starwood up 16 percent on Friday.
All of this buzz has me wondering: who is Sam Zell and what’s the big deal?
Zell has been around for a long time and is most recently known for his purchase of the Tribune Company. After acquiring the company in late 2007, he took it private.
Since then the Tribune Company filed for bankruptcy protection and Zell has been shopping the Cubs and Wrigley Field around for a buyer or buyers. (Mark Cuban was interested, but that deal hit a snag.)
Last month, Zell was mentioned in the criminal complaint against Illinois Governor Rod Blagojevich. Zell may have been offered tax breaks on the sale of Wrigley Field in exchange for firing some of the Tribune’s editorial staff.
Although Zell has recently made the news for mostly undesirable reasons, the Tribune fiasco appears to be the only glaring loser in an otherwise very profitable career. According to wikipedia, Zell is worth about $5 billion and serves as the Chairman of Capital Trust, Inc. (Ticker: CT) and Anixter International (Ticker: AXE).
So, what does all of this mean for Starwood? Considering that Starwood’s shares have lost 48 percent of their value in the past year, news of a substantial investment from anyone is great news!
Perhaps the run-up is not so much about Mr. Zell as it is about Mr. Zell’s money.