Starwood to accept $13.2bn Anbang offer

Anbang Insurance raised its unsolicited takeover offer to outbid Marriott for the hotel chain Friday.

Barring a counteroffer, China’s Anbang Insurance Group has emerged the likely winner for Starwood Hotels & Resorts Worldwide.

On Friday, the insurer-led 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 International’s November bid was worth $68 a share, valuing Starwood at $12.2 billion. In a statement, Starwood’s board of directors called Anbang’s offer a “superior proposal.” Anbang’s bid is all-cash. Marriott, by contrast, offered $2 in cash per share, with the rest in Marriott stock.

Starwood said Friday it planned to accept the raised buyout, giving Marriott until March 28 to re-negotiate its offer. Starwood would have to pay Marriott a $400 million termination agreement if it accepts Anbang’s proposal. Marriott is in the process of reviewing Anbang’s offer, the company said Friday.

“Marriott continues to believe that a combination of Marriott and Starwood is the best course for both companies and offers the best value to Starwood shareholders,” the company said in a statement.

If the Anbang deal goes through, it would be the largest-ever takeover of a US company by a Chinese buyer. Bloomberg reported that the Anbang-led consortium includes private equity firm J.C. Flowers & Co. and Chinese investment firm Primavera Capital.

The announcement comes as Anbang Insurance makes further inroads in Western hotels. On Monday, 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.

Blackstone declined to comment but sources close to the deal confirmed the news to PERE.

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.