Starwood Hotels & Results Worldwide Inc. received a binding $13.2 billion takeover bid from a Chinese group led by Anbang Insurance Group Co. The offer is better than one by Marriott International Inc., which was accepted last November.
Anbang and its partners have promised to pay $78 a share in cash for the hotels company, according to a statement released Friday. The offer is $2 more per share than the surprise bid they made last week. Bloomberg News reports that the bid is better than Marriott’s cash-and-stock deal that Starwood already agreed to. That bid is worth about $68 per share.
Starwood notified Marriott of the new deal and advised that the Anbang group’s bid was fully financed and a “superior proposal” than the one Marriott offered. As such, the Starwood board will terminate the Marriott merger agreement. Marriott was given until 11:59 pm New York Time on March 28 to negotiate a better agreement.
CNN Money reports that Marriott will consider topping the new offer though it didn’t specify how. In its own statement, the hotel company added that it believes the merger offers the best value to Starwood shareholders. The company is “carefully considering its alternatives,” according to the statement.
The Anbang acquisition would require approval by regulators and Starwood shareholders. It would be the largest takeover of a U.S. company by a Chinese buyer in history. Starwood owns 1,300 hotels and resorts in more than 100 countries. It has about 180,000 employees and includes brands like Sheraton, St. Regis, W, and Westin.
Anbang’s push into U.S. hotels began last year with a purchase of Manhattan’s Waldorf Astoria. The company also agreed to purchase Strategic Hotels & Resorts Inc. Strategic owns 16 luxury U.S. properties.
It’s understandable that Anbang’s offer is more interesting to Starwood. While the Chinese group’s offer is all cash, Mariott’s offer is $2 cash and the rest in Marriott stock. If Marriott’s merger with Starwood doesn’t go through, then Starwood will need to pay Marriott a $400 million break-up fee.