Marriott back in for Starwood

The hotel company increased its offer for Starwood to $13.6 billion, days after Anbang Insurance likewise upped its bid.

Marriott International has sweetened its bid for Starwood Hotels & Resorts Worldwide, becoming, once again the frontrunner in what has become a fierce two-way fight for the hotel company.

Marriott’s new cash and stock offer values Starwood at $13.6 billion. On Friday, China’s Anbang Insurance, which is leading a consortium of investors, increased its original offer for the hotel chain by $2 per share to $78 per share, valuing the hotel chain at $13.2 billion. Marriott’s first November bid valued Starwood at $12.2 billion.

Starwood and Marriott have signed an amended merger agreement that 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 both sides’ shareholders.

Anbang, or any other interested bidders, have until April 8 to make a counteroffer. The new merger agreement also increased Starwood’s breakup fee to $450 million from $400 million, which Starwood would have to pay to Marriott if it accepts another offer.

“We are pleased that Marriott has recognized the value that Starwood brings to this merger and enhanced the consideration being paid to Starwood shareholders,” said Bruce Duncan, Starwood’s chairman, in a statement Monday. “We continue to be excited about the combination of Starwood and Marriott, which will create the world’s largest hotel company with an unparalleled platform for global growth in the upscale segment.”

The latest announcement in the bidding war comes as Anbang Insurance makes further inroads in Western hotels. Last week, it was reported that the insurance company is buying Strategic Hotels & Resorts from The Blackstone Group for $6.5 billion in what will be the largest ever platform-level acquisition in the US hospitality sector by a Chinese company.

The US luxury resort company Strategic is the owner and asset manager of 16 hotels and resorts across the country spread over 807,000 square feet. The company will be sold only three months after Blackstone acquired it at a total transaction value of $6 billion via its $15.8 billion Blackstone Real Estate Partners VIII fund.

Anbang Insurance was also at the helm of the largest acquisition of a US property asset by a Chinese company back in 2014 when it acquired the iconic Waldorf Astoria hotel from the Hilton Group for around $1.95 billion in October. The insurer made headlines with the approximately $1.4 million price it paid per room for the New York hotel.

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.