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China’s Anbang abandons its $14 billion bid to acquire Starwood China’s Anbang abandons its $14 billion bid to acquire Starwood
(about 2 hours later)
Chinese firm Anbang Insurance Group on Thursday abandoned its plans to acquire Starwood Hotels & Resorts for $14 billion in cash, putting an end to a weeks-long bidding war with Marriott International. Chinese firm Anbang Insurance Group on Thursday abandoned its plans to acquire Starwood Hotels & Resorts for $14 billion in cash, putting an end to a weeks-long bidding war with Marriott International.
Anbang, which is leading a group of investors, said it was pulling out “due to various market considerations.”Anbang, which is leading a group of investors, said it was pulling out “due to various market considerations.”
“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 group said in a statement. The consortium of investors includes private-equity firms Primavera Capital Group in Beijing and J.C. Flowers in New York.“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 group said in a statement. The consortium of investors includes private-equity firms Primavera Capital Group in Beijing and J.C. Flowers in New York.
“Anbang is a proactive global investor with deep pockets, but also financially savvy with price discipline,” said Fred Hu, chairman of Primavera. “This is the main reason they decided to walk away from a further escalation of the biding war with Marriott.”“Anbang is a proactive global investor with deep pockets, but also financially savvy with price discipline,” said Fred Hu, chairman of Primavera. “This is the main reason they decided to walk away from a further escalation of the biding war with Marriott.”
The surprise move comes just days after Anbang sweetened its bid for Starwood to $14 billion, or $82.75 a share in cash — an offer under review that Starwood said was “reasonably likely to lead to a “superior proposal” over Marriott’s latest $13.6 billion bid. The surprise move comes just days after Anbang sweetened its bid for Starwood to $14 billion, or $82.75 a share in cash — an offer under review that Starwood said was “reasonably likely to lead to a “superior proposal” over Marriott’s $13.6 billion bid.
After Anbang’s exit, Marriott encouraged shareholders of both companies to support its offer in a vote set for April 8.After Anbang’s exit, Marriott encouraged shareholders of both companies to support its offer in a vote set for April 8.
“We are focused on maximizing shareholder value and from the beginning of this process we have been steadfast in our belief that a combination with Starwood will offer the highest value to all shareholders,” said Arne M. Sorenson, Marriott’s chief executive. “We are focused on maximizing shareholder value, and from the beginning of this process we have been steadfast in our belief that a combination with Starwood will offer the highest value to all shareholders,” said Arne M. Sorenson, Marriott’s chief executive.
Shares of Starwood and Bethesda, Md.-based Marriott fell about 5 percent in after-hours trading Thursday. Starwood’s stock tumbled 4.53 percent to $79.65, while Marriott’s stock dropped 5 percent to $67.60. Shares of Starwood and Marriott, based in Bethesda, Md., fell about 5 percent in after-hours trading Thursday. Starwood’s stock tumbled 4.53 percent to $79.65, while Marriott’s stock dropped 5 percent to $67.60.
Under Marriott’s proposal, Starwood shareholders would receive $21 a share in cash and 0.8 shares of Marriott for each share of Starwood, up from its previous offer of $2 a share in cash and 0.92 shares of Marriott for each share of Starwood. If the deal is completed, it would create the world’s largest hotel company, with 1.1 million rooms. Under Marriott’s proposal, Starwood shareholders would receive $21 a share in cash and 0.8 shares of Marriott for each share of Starwood, up from its previous offer of $2 a share in cash and 0.92 shares of Marriott for each share of Starwood. If the deal is completed, it would create the world’s largest hotel company, with 1.1 million rooms.
Marriott announced its plans to take over Starwood in November for $12.2 billion. The combined hotelier, to be based in Bethesda, would own or franchise 5,500 properties and have nearly $20 billion in annual revenue. In November, Marriott announced its plans to take over Starwood for $12.2 billion. The combined hotelier, to be based in Bethesda, would own or franchise 5,500 properties and have nearly $20 billion in annual revenue.
Sorenson said Marriott had been drawn to Starwood because of its global presence, strong rewards program and its popularity among younger travelers. Sorenson said Marriott had been drawn to Starwood because of its global presence, strong rewards program and popularity among younger travelers.
It had seemed like a done deal until Anbang entered the picture two weeks ago, offering cash and derailing Marriott’s plans. As a result, Marriott increased its offer and reiterated its expertise in operating a large hotel company. As negotiations dragged on, it also said it expected a merger with Starwood to save $250 million in annual costs within two years.It had seemed like a done deal until Anbang entered the picture two weeks ago, offering cash and derailing Marriott’s plans. As a result, Marriott increased its offer and reiterated its expertise in operating a large hotel company. As negotiations dragged on, it also said it expected a merger with Starwood to save $250 million in annual costs within two years.
“We’ve been working intensely, since we announced this deal in November, to prepare for integration and to understand each others’ organizations and structures and start to think about how to meld those into one organization,” Sorenson said in a call with Wall Street analysts last week.“We’ve been working intensely, since we announced this deal in November, to prepare for integration and to understand each others’ organizations and structures and start to think about how to meld those into one organization,” Sorenson said in a call with Wall Street analysts last week.
If it goes through, the deal is expected to be done by the middle of this year.If it goes through, the deal is expected to be done by the middle of this year.
If Starwood were to end its agreement with Marriott, the company would be obligated to pay Marriott a $450 million termination fee.If Starwood were to end its agreement with Marriott, the company would be obligated to pay Marriott a $450 million termination fee.
Anbang had offered few details about its plans for Starwood. The deal would have been subject to review by the Committee on Foreign Investment in the United States. Marriott had called the group’s bid “highly conditional.” Anbang had offered few details about its plans for Starwood. The deal would have been subject to review by the Committee on Foreign Investment in the United States.Marriott had called the group’s bid “highly conditional.”
Anbang got its start as a $75 million regional auto insurer in 2004 and has emerged as a powerhouse conglomerate with $25 billion in assets. It is one of many Chinese companies making big investments in the United States. This year, Chinese companies have announced plans to buy 153 foreign companies worth $103 billion, according to Dealogic, a data research firm in New York. Anbang got its start as a $75 million regional auto insurer in 2004 and has emerged as a powerhouse conglomerate with $25 billion in assets. It is one of many Chinese companies making bigbig investments in the United States. This year, Chinese companies have announced plans to buy 153 foreign companies worth $103 billion, according to Dealogic, a data research firm in New York.
The company made its first foray into U.S. hotels two years ago when it bought the Waldorf Astoria New York for $1.95 billion from Hilton Worldwide. This month Anbang paid $6.5 billion for Strategic Hotels & Resorts, a Chicago-based company that owns luxury hotels. Starwood would have marked the largest purchase of a U.S. company by a Chinese firm.The company made its first foray into U.S. hotels two years ago when it bought the Waldorf Astoria New York for $1.95 billion from Hilton Worldwide. This month Anbang paid $6.5 billion for Strategic Hotels & Resorts, a Chicago-based company that owns luxury hotels. Starwood would have marked the largest purchase of a U.S. company by a Chinese firm.
Steven Mufson in Paris contributed to this report.Steven Mufson in Paris contributed to this report.