NEW YORK CITY: China’s Anbang and its partners said on Thursday (Friday in Manila) they had withdrawn a $14 billion takeover offer for Starwood Hotels & Resorts Worldwide, leaving Starwood free to merge with Marriott International.
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.”
Starwood now can pursue its agreed $13.6 billion merger deal with Marriott International that would create the world’s largest hotel chain.
Starwood and Marriott shares sank after Anbang dropped the bid. Starwood shares fell 4.1 percent to $80.05 in after-market trade and Marriott was down 5.0 percent at $67.61.
Starwood was not immediately available for comment.
“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 $250 million in annual cost synergies within two years after closing which is expected by mid-2016.
The announcement by Anbang Insurance Group and its partners, China-based Primavera Capital and US private-equity investor JC Flowers & Co., ended a surprisingly heated bidding war.
Starwood initially accepted a Marriott stock-and-cash merger offer in November, then Anbang swooped in with a higher bid. Marriott raised its offer to $13.6 billion, which Starwood accepted on March 21.
Over the weekend the Anbang-led group sweetened its all-cash offer to $82.75 per share, or $14 billion. Starwood said Monday it was considering the new Anbang bid, which was “reasonably likely” to be superior to Marriott’s, but was continuing to discuss “non-price terms” with the suitors.
Starwood at the time said its board was still recommending the offer from Marriott, which reaffirmed its commitment to the acquisition. But Marriott warned Starwood shareholders to focus on the Anbang-led offer’s financing and timing of any required regulatory approvals.
Anbang’s US hotels fever
An Anbang acquisition of Starwood would have been the largest Chinese takeover of a US company, exceeding pork producer WH Group’s purchase in 2013 of Smithfield Foods in a $7.1 billion deal.
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.Starwood was not the only hotel target in the United States for the deep-pocketed Anbang, which has $254 billion in assets.
Anbang earlier this month proposed $6.5 billion to acquire luxury properties from US investment fund Blackstone. It bought New York’s historic Waldorf Astoria hotel for nearly $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 reported earlier this month 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 which 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” toward the deals, the magazine said.