- Starwood Hotels
Chinese insurance giant Anbang is walking away from its $14 billion bid for Starwood Hotels and Resorts Worldwide.
Anbang was leading a group of bidders, including the private equity firms J.C. Flowers and Primavera Capital Limited, which said in a statement it would not proceed further “due to various market considerations.”
Starwood shares were down more than 4% following the news.
The company, which owns brands including Westin, St. Regis, and Four Points, last year agreed to be bought by Marriott International.
Anbang, which bought the Waldorf-Astoria last year, has made multiple attempts to bust up the Starwood-Marriott deal in recent weeks.
Marriott shares were also down about 4% following the news.
Here’s a recap of events:
- Starwood in November agreed to be bought by Marriott in a deal that valued it at $79.88 a share.On March 18, Starwood confirmed that it got an attractive takeover offer from a group of companies led by Anbang Insurance Group, which has been on a deal spree since buying the Waldorf-Astoria 18 months ago. Anbang first offered $76 a share in cash, and it then boosted that offer to $78. Marriott turned around on March 21 and boosted its bid for Starwood. The announcement, based on March 18 closing prices, valued Starwood at $79.53 a share. On Monday, Anbang boosted its offer to $82.75 in cash, and Starwood said that that offer would most likely be a “Superior Proposal,” which is basically a counter bid that lets it break off the deal with Marriott.
With Anbang abandoning the deal, however, the path will now be clear for Starwood shareholders to approve the Marriott offer.
Why walk away?
It’s not yet clear why Anbang is walking away after making its latest offer. Reuters reports that Anbang did not give Starwood a reason for its decision.
It could have to do with regulatory concerns – in the US and back home in China.
- Courtesy of The St. Regis Bora Bora Resort
Chinese companies have been buying up US names at a record rate this year, and American regulators have been sounding the alarm bells. In 2014, the most recent year with publicly available data, 16% of deals that were scrutinized by the US Treasury involved Chinese acquirers.
In a statement on Monday, Marriott said: “Starwood stockholders should give serious consideration to the question of whether the Anbang-led consortium will be able to close the proposed transaction, with a particular focus on the certainty of the consortium’s financing and the timing of any required regulatory approvals.”
That said, the Treasury did approve Anbang’s $2 billion purchase of the Waldorf-Astoria last year.
There have also been concerns about regulators in China.
Last week, the local magazine Caixin reported that Chinese insurance regulators could block the deal because it would push Anbang’s offshore assets above a 15% threshold set for overseas investments.
Anbang agreed earlier this month to buy Strategic Hotels from Blackstone Group for $6.5 billion.