Anbang Pulls Out Of Starwood Deal, Clearing The Way For Marriott Takeover

The St. Regis New York. Photo courtesy: Onyo

Anbang Insurance Group unexpectedly withdrew its bid Thursday for control of Starwood Hotels & Resorts, clearing the way for Marriott to create the world’s largest hotel chain.

Anbang and its partners—private equity firms J.C. Flowers & Co. and Primavera Capital Group—did not follow through with its March 26 proposal to make it binding. They cited “various market considerations,” but declined to elaborate.

For the past three weeks, the Chinese-based company and Marriott have been in a bidding war for the parent company of Sheraton, Westin, and W Hotels. Many analysts predicted it was game-over when Anbang offered $82.75 per share in an all-cash deal, making yesterday’s turn of events that much more surprising.

Now, Marriott can go through with its cash-and-stock bid worth $77.94 per share, or about $13.3 billion. The combined company will operate more than 5,500 hotels with 1.1 million rooms worldwide.

“Throughout this process, we have been focused on maximizing stockholder value now and in the future,” said Starwood chairman Bruce Duncan in a statement. “Our board is confident this transaction offers superior value for Starwood’s stockholders, can close quickly and provides value-creation potential that will enable both sets of stockholders to benefit from future financial performance.”

Starwood stockholders are set to vote—and approve—the merger agreement on April 8.

“We’re thrilled,” said Marriott Chief Executive Arne Sorenson, “and we’re ready to go.”

Over the past two years, Anbang has made its presence felt in the U.S. hospitality industry. It’s in a deal to acquire luxury-property owner Strategic Hotels & Resorts Inc. for about $6.5 billion, and last year purchased Manhattan’s landmark Waldorf Astoria for $1.95 billion. While Anbang was expected to hit regulatory obstacles, the deal would have been the biggest takeover of an American target by a Chinese buyer.