Starwood board weighs options in Anbang offer
The next 48 hours will be very interesting for board members of Starwood Hotels & Resorts Worldwide Inc as they consider an unsolicited offer of about $12.8 billion from a consortium led by China’s Anbang Insurance Co.
Starwood, based in Stamford, Connecticut, has a waiver from Marriott International Inc that enables it to engage in talks with the Anbang group until 11:59 pm EDT on Thursday. Starwood’s board said “it has not changed its recommendation” in supporting the $12.2 billion offer from Marriott.
“They don’t have to make a decision — and everything is negotiable,” C. Patrick Scholes, an analyst with SunTrust Robinson Humphrey Inc, told China Daily when asked if the board had to decide by the Thursday deadline.
“Starwood can choose to not do anything. However, they cannot continue to keep conversing with Anbang once the waiver period ends.”
The Anbang group offer is $76 a share in cash for Starwood, the owner of the Westin and Sheraton brands. Anbang’s partners include Primavera Capital Group, a China-based private-equity concern, and J.C. Flowers & Co.
Last year, Marriott agreed to pay cash and stock that currently values Starwood at about $67.22 a share, according to Reuters.
Scholes said that there is a breakup fee of $400 million that Starwood would have to pay Marriott offer.
The Starwood offer came a few days after Anbang also reportedly agreed to buy a luxury-hotel portfolio from Blackstone Group LP’s Strategic Hotels & Resorts Inc for about $6.5 billion.
Anbang, a Chinese insurer founded in 2014, acquired the Waldorf-Astoria New York hotel for $1.95 billion in 2014. Anbang has not commented publicly on the Starwood or Blackstone deals.
it accepts another
The Anbang deal could face review by the Committee on Foreign Investment in the United States (CFIUS), an interagency group that has broad authority to review transactions in which a foreign company acquires control over a US business.
John O’Neill, director of the Center for Hospitality Real Estate Strategy at Penn State University, said that Anbang wants its portfolio to be heavily weighted with US-based hotel companies.
“(Anbang) apparently has the wherewithal to do so, but it raises the question of whether they’re unilaterally doing what will provide them with a satisfactory risk profile, particularly considering the relatively high share price Anbang is offering for Starwood,” O’Neill said.
“A transaction more akin to Jin Jiang and Thayer’s mutual acquisition of Interstate would be less risky for Anbang,” he said, referring to the 2009 deal involving the Thayer Lodging Group and Shanghai Jin Jiang International Hotels.
They paid about $307 million to acquire US-based Interstate Hotels & Resorts Inc, which managed more than 200 properties at the time.
“Anbang would benefit from a US asset manager to provide them with (the) requisite intelligence regarding the brands, properties and submarkets, as well as to monitor the ongoing performance of this very pricey portfolio,” O’Neill said.
C. Patrick Scholes, analyst with Sun Trust Robinson Humphrey Inc