Marriott Edged Out By Chinese Investors In Starwood Deal

UPDATE: Marriott resubmitted its bid, beating the Chinese group in the ping-pong match for Starwood, creating the world’s largest hotel company.

Starwood Hotels & Resorts said Friday it is ending its deal with Marriott International in favor of the $13.2 billion offer from a consortium of Chinese-based investors, led by Anbang Insurance Group.

The investment group originally made an unsolicited bid of $76 per share, or about $12.8 billion, to acquire the Westin, W, and Sheraton brands. Compared to Marriott’s $12.2 billion bid (which is now closer to $11 billion because of Marriott’s falling stock prices over the last five months), Starwood said the new offer was simply a “superior proposal.”

But it’s not a done deal. Starwood said it will accept a new offer from Marriott through March 28.

“Starwood will negotiate in good faith with Marriott during this period, and the Starwood Board will consider in good faith any changes to the Marriott agreement that Marriott may propose during this period,” Starwood said in a statement.

Marriott is expected to go through with a counter offer. The company said it “continues to believe that a combination of Marriott and Starwood is the best course for both companies” and that it is “carefully considering its alternatives.”

If Starwood ends up accepting Marriott’s offer, the combined company would be the largest hotel chain in the world, operating more than 5,500 hotels with 1.1 million rooms worldwide.

The bid from Anbang Insurance Group is part of a major push from the company to invest in the U.S. hotel market. It acquired the Waldorf Astoria for $1.95 billion and bought Strategic Hotels and Resorts from the Blackstone Group in a deal valued at $6.5 billion – giving Anbang ownership of 17 of the most noted hotels in the United States, including the Hotel del Coronado in San Diego; several Ritz-Carltons in California; the Fairmont Scottsdale in Arizona; the Four Seasons Resort in Jackson Hole; the Fairmont and Intercontinental hotels in Chicago; and the JW Marriott Essex House in Manhattan.

For the scoop on Anbang, see our story from yesterday.