Chinese company offers $14 billion cash for Starwood Hotels

By Ed Adamczyk Follow @adamczyk_ed Contact the Author   |   March 29, 2016 at 9:34 AM

STAMFORD, Conn., March 29 (UPI) -- A $14 billion offer from a Chinese-led consortium has stalled Starwood Hotels' pending sale to Marriott International.

Hotel company Marriott announced in November that it had agreed to purchase Starwood, owner of the Westin, Sheraton and W international hotel chains, for $12.2 billion. The deal would form the world's largest hotel company, but a consortium led by the Anbang Insurance Company, owners of New York's prestigious Waldorf-Astoria hotel, as well as real estate in Canada; insurance companies in Belgium, the Netherlands and South Korea and the Belgian banking operations of Dutch insurance company Delta Lloyd, offered a higher price.

Marriott countered with a $13.6 billion offer, in cash and Marriott stock. Starwood is now considering Anbang's most recent offer of $14 billion, all in cash. Starwood management will convene to consider Anbang's latest proposal on April 8, and has not changed its recommendation to accept Marriott's offer.

A deal between Starwood and Anbang would face U.S. government scrutiny, as well as enforcement of a Chinese law preventing Chinese insurance companies from investing more than 15 percent of assets outside the country. If Anbang acquires Starwood, a $400 million termination fee specified in the Starwood-Marriott agreement would also be paid.

Analyst David Loeb told CNBC Tuesday a higher offer from Marriott should not be expected.

"I just think Marriott is too disciplined to pay more than what they've already offered. If I was a Starwood shareholder, I would be asking for the maximum value and I would be asking for the maximum value now. I think Anbang's offer, being all cash, is probably the one that shareholders would rather have. The advantage is definitely with Anbang at this point," he said.

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