China’s Anbang Insurance Group Co (安邦保險集團) and its partners said on Thursday they had withdrawn a US$14 billion takeover offer for Starwood Hotels & Resorts Worldwide Inc, leaving Starwood free to merge with Marriott International Inc.
In a brief statement, the Anbang-led consortium said it “has determined not to proceed further” with the offer for the US hotel operator, “due to various market considerations.”
The announcement by Anbang Insurance Group and its partners, China-based Primavera Capital Ltd (春華資本) and US private-equity investor JC Flowers & Co, ended a surprisingly heated bidding war.
Photo: Reuters
However, Anbang’s heated pursuit of Starwood raised eyebrows. The Chinese company, which started out just 12 years ago as a property insurance firm before expanding into other financial services, has solid political connections, but its stakeholders remain unclear.
Anbang earlier last month proposed US$6.5 billion to acquire luxury properties from US investment fund Blackstone Group LP. It bought New York’s historic Waldorf Astoria hotel for nearly US$2 billion in 2014.
Analysts question why a Chinese insurance company wants to become an international hotelier, and Chinese authorities have expressed concern.
Respected business magazine Caixin earlier this month reported that China’s insurance regulator opposed Anbang’s multibillion-dollar bids for Starwood and the Blackstone properties.
The China Insurance Regulatory Commission is against both of Anbang’s proposed acquisitions under rules that reportedly ban insurers from investing more than 15 percent of their assets overseas, Caixin quoted a source as saying.
The regulator also had a “disapproving attitude” towards the deals, the magazine said.
Starwood now can pursue its agreed US$13.6 billion merger deal with Marriott International that would create the world’s largest hotel chain.
Starwood shares fell 4.1 percent to US$80.05 in after-market trade and Marriott was down 5 percent at US$67.61.
“We were attracted to the opportunity presented by Starwood because of its high-quality, leading global hotel brands, which met many of our acquisition criteria, including the ability to generate consistent, long-term returns over time,” the statement said. “However, due to various market considerations, the consortium has determined not to proceed further.”
Starwood is now free to finalize its discussions with Marriott. Both companies have scheduled shareholder meetings on April 8 to vote on the merger, which brings together the two largest US hotel groups.
Marriott has more than 4,400 properties worldwide, with a portfolio of brands including The Ritz-Carlton, JW Marriott and Gaylord Hotels. Starwood has 1,270 properties in 100 countries and includes the St Regis, Sheraton, Westin and W Hotels brands, among others.
The combination would help Marriott expand in China, India and Europe, regions where Starwood has a strong presence.
Marriott estimates the merger will yield US$250 million in annual cost synergies within two years after closing, which is expected by the middle of the year.
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