China company to pull out of bidding war for Starwood
Move positions Marriott to go ahead with plan to purchase hotels.
The jostling for Starwood may be over.
China’s Anbang Insurance Group will walk away from its plans to buy Starwood Hotels & Resorts Worldwide only two days after submitting a revised $13.9 billion offer for the hotel company, says a person familiar with the matter Thursday.
Anbang, joined by other inves- tors in its consortium, raised its offer on Tuesday to pay $82.75 in cash per Starwood share, trumping a competing bid from Marriott International.
With Anbang no longer competing, Marriott is expected to resume completing the deal to buy its rival to form the world’s largest hotel operator.
Shares of Starwood, whose brands include Westin, Sheraton and W Hotels, fell 4.5% in afterhours trading to $79.70. Marriott fell 4.6% to $67.92.
Based in Bethesda, Md., Marriott agreed in November to acquire Starwood for $12.2 billion — $2 in cash and 0.92 of its own shares for each Starwood share. But it ran into competition from Anbang, which has been aggressively buying U.S. assets and is expanding its hospitality business as the Chinese travel market grows rapidly.
Starwood dropped Marriott’s bid on March 18 to opt for a $13 billion all-cash offer from Anbang, valued at about $78 per Starwood share. Marriott then raised its bid to about $13.6 billion, or $79.53 per Starwood share, to be paid in $21 in cash and 0.80 shares of Marriott Class A common stock for each Starwood share.
As Anbang sweetened its offer earlier this week, Marriott repeated that it was committed to finishing the acquisition and voiced its doubt that Anbang could come up with the financing to buy Starwood. “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,” Marriott said in a statement issued Tuesday.
Starwood, whose board of directors has publicly backed Marriott’s bid, would have owed Marriott $450 million in cash if it backed out of its agreement with Marriott.
If Starwood and Marriott combine their assets, the post-merger company would operate or franchise more than 5,500 hotels with 1.1 million rooms worldwide.