Anbang walks away from Starwood

Marriott International has emerged the winner for Starwood Hotels & Resorts Worldwide after Anbang Insurance walked away from the bidding war.

The Chinese insurer is rescinding its $14 billion bid for the hotel chain, The Wall Street Journal (WSJ) reported Thursday. The news came days after Anbang sweetened its offer in an attempt to win over the Stamford, Connecticut-based luxury hotel chain. Starwood said Anbang cited “market considerations” as rationale for withdrawing its offer, according to a Thursday statement on Starwood's website.

Starwood now plans to accept Marriott’s most recent cash-and-stock bid, which valued the hotel chain at $79.53 a share, or $13.6 billion, according to the WSJ article. 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 had to pay a $450 million breakup fee, up $50 million from the original fee, if it accepted another offer.

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 Starwood’s shareholders, who will vote on the takeover April 8.

The end to the bidding war comes as Anbang makes further inroads into Western hotels. Three weeks ago, the insurance company reportedly agreed to buy Strategic Hotels & Resorts from The Blackstone Group for $6.5 billion. Blackstone could not be reached for comment for this story.

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.