China’s Anbang Makes Rival Offer for Starwood

The $12.8 billion, or $76-per-share, bid could potentially derail Starwood's pending merger with Marriott, which is valued at $65.38 a share.
Katie Kuehner-HebertMarch 14, 2016

A group led by China’s Anbang Insurance Group has made an unsolicited $12.8 billion offer for Starwood Hotels, potentially derailing Marriott’s pending deal for the U.S. hotelier.

Starwood said Monday it had received a non-binding proposal from a consortium of companies to acquire all of its outstanding shares of common stock for $76 per share in cash.

While the company did not name the lead firm in the consortium, Reuters reported that it was Anbang Insurance. The consortium also includes private equity firm J.C. Flowers & Co. and China’s Primavera Capital Group, a source told Reuters.

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Anbang’s offer is a 7.9% premium to Starwood’s closing stock price of $70.42 on Friday. Marriott’s cash-and-stock deal, which was announced in November, is valued at $65.38 a share, or about $11 billion, according to Friday’s closing price.

Starwood said its board had not changed its recommendation in favor of Marriott’s offer but would “carefully consider the outcome of its discussions with the consortium in order to determine the course of action that is in the best interest of Starwood and its stockholders.”

The company is permitted to talk with rival bidders until March 17. Should it terminate the agreement with Marriott, it would be obligated to pay Marriott a $400 million termination fee in cash.

“Anbang’s non-binding offer places Starwood shareholders in the difficult position of choosing between Marriott’s bird-in-a-hand firm commitment and Anbang’s two-in-the-bush offer,” Nomura Securities analyst Harry Curtis wrote in a note to clients.

The Los Angeles Times said Anbang “appears to be making big plays in the American hotel industry,” having acquired the New York Waldorf-Astoria for $1.95 billion in 2014. It is also reportedly close to a deal to buy 16 luxury hotels owned by private equity firm Blackstone Group.

“Anbang’s move is the latest by Chinese companies looking to snap up properties in the U.S., as they view high-quality real estate as a haven for savings,” the Wall Street Journal said.

The proposed merger between Starwood and Marriott would create the world’s largest hotel operator. “Marriott is confident that the previously announced merger agreement is the best course for both companies,” Marriott said Monday.