Anbang outbids Marriott for Starwood with $14bn offer

In the latest round of the bidding war for the hotel chain, the Chinese insurer made a higher takeover offer than rival Marriott’s $12.8 billion bid.

China’s Anbang Insurance has outbid Marriott International for Starwood Hotels & Resorts in its third offer to acquire the Stamford, Connecticut-based hotel company.

Starwood said Monday it received an all-cash proposal from the Anbang-led consortium of investors for $82.75 per share, valuing the hotel chain at about $14 billion. Marriott’s latest offer, which Starwood said last week it would accept, was a cash-and-stock bid that valued the company at $12.8 billion, based on Thursday’s closing price.

Marriott originally offered to buy Starwood in November for $12.2 billion before Anbang made a bigger, unsolicited bid two weeks ago along with private equity firm J.C. Flowers & Co. and Chinese investment firm Primavera Capital. Since that group’s bid, the two potential buyers have been vying for the hotel chain with sweetened offers. In Marriott’s latest agreement, Starwood would have to pay a $450 million breakup fee, up $50 million from the original fee, if it accepts another offer.

Starwood said Anbang’s latest offer “is reasonably likely to lead to a ‘Superior Proposal,’” but its board of directors has not changed its recommendation supporting the company’s merger with Marriott, Starwood said in a statement Monday. Last week’s amended merger agreement between the two chains would create the world’s largest hotel company, with more than 5,500 hotels worldwide. The companies have received regulatory approval, but the deal must still be approved by shareholders on both sides.

Starwood is still holding its planned stockholder meeting on Monday to consider Marriott’s proposal. The company has until April 8 to make a final decision.

The latest announcement in the bidding war comes as Anbang makes further inroads into Western hotels. Two weeks ago, it was reported that the insurance company is buying Strategic Hotels & Resorts from The Blackstone Group for $6.5 billion. Neither the Starwood deal nor the Strategic purchase has the greenlight from China’s government, however. Last week, a Chinese financial magazine reported that an official at China Insurance Regulatory Commission said the regulator is planning to reject both of Anbang’s hotel purchases, citing a rule that bans insurers from investing more than 15 percent of their assets abroad, among other unspecified reasons.

Anbang started acquiring US hotels in October 2014 when it bought New York’s iconic Waldorf Astoria hotel from the Hilton Group for around $1.95 billion in the largest acquisition of a US property asset by a Chinese company.

Chinese insurance companies have been a significant part of the growing wave of Chinese capital flocking to international real estate markets in a bid to diversify their property holdings and reduce exposure in an uncertain domestic economy. Over the next five years, insurers from the mainland are expected to spend as much as $73 billion in overseas property acquisitions, according to a report published by Cushman & Wakefield in November. These investments by Anbang into the US hotels market would make serious inroads into that estimation.

Raymond Goh, director of Anbang International Holdings, will share his views on Chinese investors’ outbound investment trends with other local investors such as Ping An Insurance at PERE Forum China 2016 in Shanghai this May. For full agenda, please check