Starwood gets $13 billion bid from Anbang, tops Marriott offer

Sat Mar 19, 2016 6:24pm EDT
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By Michael Erman and Diane Bartz

(Reuters) - Starwood Hotels & Resorts Worldwide Inc HOT.N on Friday said a $13 billion cash offer from China's Anbang Insurance Group Co was superior to one from Marriott International Inc (MAR.O: Quote), setting the stage for the largest-ever deal by a Chinese company in the United States.

The operator of Sheraton and Westin hotels said the Chinese insurer's offer beat Marriott's previously agreed cash and stock offer by nearly 15 percent, and that it planned to scrap the proposed deal with the rival hotel chain.

Anbang has been on a U.S. hotel buying spree as Chinese insurers rush to acquire cash-generating assets as they struggle to keep up with the policy liabilities of the country's aging population. U.S. assets are also seen as a good hedge against weakness in the Chinese yuan currency.

The Anbang-led consortium - which also includes private equity firms J.C. Flowers & Co from the United States and Primavera Capital from China - has bid $78 per share in cash, or $13.16 billion overall, based on shares outstanding as of Feb. 19. Anbang's bid is binding and fully financed, Starwood said.

At Thursday's close, Marriott's bid for Starwood was worth $68.06 per share, or around $11.5 billion overall.

Starwood will have to pay a $400 million breakup fee to Marriott if it walks away from their deal. Starwood's shares were up 5 percent at $80.20 in afternoon trading, their highest level since November.

Marriott, which has until March 28 to counter Anbang's offer, said it was considering its options.

Dan Wasiolek, a hotel industry analyst at Morningstar, said Marriott could still counter with a higher offer.   Continued...

A man walks into the 'W London' hotel, owned by Starwood Hotels, in Leicester Square in central London March 4, 2014. REUTERS/Toby Melville