China’s Anbang Insurance Group Co. Ltd. has abandoned its bid for Starwood Hotels & Resorts Worldwide Inc., paving the way for Marriott International Inc. to buy the Sheraton and Westin hotels operator.
The surprise withdrawal marks an anticlimactic end to a bidding war that had pitted Marriott’s ambitions to create the world’s largest lodging company, with about 5,700 hotels, against Anbang’s drive to create a vast portfolio of US real estate assets, Reuters reported.
“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,” Anbang said in a statement.
“However, due to various market considerations, the consortium has determined not to proceed further,” Anbang added, referring to the joint bid it had put together with private equity firms J.C. Flowers & Co. and Primavera Capital Ltd.
Anbang did not offer Starwood a reason for not following through on its raised offer of March 26, the news agency said, citing people familiar with the matter.
Starwood said on Monday that Anbang had raised its offer to almost US$14 billion. Anbang had been expected to firm up that non-binding offer, so that Starwood would formally declare it superior to Marriott’s.
Anbang had already made a US$13.2 billion binding and fully financed offer earlier this month that Starwood accepted as superior.
Had Marriott not counterbid on March 21, Starwood would have proceeded with the earlier Anbang offer.
Anbang’s latest statement fueled speculation on what drove it to change course.
Starwood and Marriott declined to provide immediate comment.
Chinese financial magazine Caixin reported earlier this month that China’s insurance regulator would probably reject a bid by Anbang to buy Starwood since it would put the insurer’s offshore assets above a 15 percent threshold for overseas investments.
Should Anbang have clinched an agreement with Starwood, it would have been scrutinized by the Committee on Foreign Investment in the United States (CFIUS), an interagency panel that reviews deals to ensure they do not harm national security.
However, sources had said that both Starwood and Anbang believed the deal would have received CFIUS clearance.
In its latest offer, Anbang’s consortium had offered US$82.75 per share in cash. Marriott’s latest cash-and-stock offer, which was announced on March 21, is currently worth around US$75 per share.
Starwood’s shares fell 4.4 percent to US$79.80 in extended trading, while Marriott shares fell 4.9 percent to US$67.68.
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