Anbang Outbids Marriott With $13.2B Offer for Starwood
By Danielle Balbi March 18, 2016 3:27 pm
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The Chinese insurer Anbang Insurance Group has proven that its $1.95 billion acquisition of the Waldorf Astoria New York last year was only the beginning of its investment into U.S. hospitality.
Earlier today, Starwood Hotels & Resorts Worldwide announced that Anbang outbid Marriott International with a $13.2 billion offer for the hotel monolith—or roughly $78 per share, as CNBC first reported. The insurance giant is partnering with J.C. Flowers & Co. and China-based Primavera Capital Group to provide Starwood with a fully-financed proposal.
Marriott said in a statement that it has until March 28 to propose a higher buy-out, and if the deal falls through Starwood is required to pay a termination fee of $400 million in cash to its former suitor. Marriott, which announced the original deal to merge with Starwood in November 2015, had offered $76 per share.
“Marriott is in the process of reviewing the Anbang consortium’s proposal and is carefully considering its alternatives,” according to the statement.
Industry experts say that the new deal makes sense, and not just from Starwood’s perspective.
“The new offer should be better for [Starwood Preferred Guest] members,” Marc Magazine, an executive managing director of the hospitality group at Savills Studley, said through a spokeswoman. “It will be better for Starwood owners to keep their brands separate from Marriott.”
If Anbang’s offer were to go through,Starwood would continue to operate as is, whereas if Marriott were to purchase Starwood, there would be significant layoffs, a source with intimate knowledge of the deal told Commercial Observer.
Starwood’s portfolio is comprised of approximately 1,300 properties across roughly 100 countries, with franchise hotel and residence brands including St. Regis Hotels & Resorts, the W Hotels & Resorts, Sheraton Hotels & Resorts and Design Hotels. It owns and operates the St. Regis New York in Midtown, the Westin Book Cadillac Hotel in Downtown Detroit and the W Washington, D.C.
Anbng has been on a roll. In 2015, the company paid $1.95 billion to buy of one of New York City’s most iconic hotels, the Waldorf Astoria. Earlier this month, Anbang signed a $6.5 billion agreement to purchase 16 U.S. hotels and resorts from Blackstone (BX) Group, as Bloomberg reported.
And Anbang’s investment play in the U.S. extends further than the hotel market. In November 2015, Anbang announced plans to purchase Des Moines, Iowa-based Fidelity & Guaranty Life for $26.80 per share. That move alone makes Anbang “one of the largest insurers by market share in fixed indexed annuity products in the U.S.,” according to a release from the time.
Representatives for Starwood and Marriott did not immediately respond to requests for comment. A representative for Anbang declined to comment.
