Starwood Hotels & Resorts Worldwide has received a takeover offer from a consortium of investors led by China's Anbang Insurance Group. The $13bn (£9.12bn, € 11.71bn) bid for the Connecticut-based company which owns brands such as Westin and Sheraton, shows the growing demand from Chinese companies for overseas assets.
The consortium, apart from Anbang, includes Primavera Capital Group, a China-based private-equity firm and J C Flowers & Co, an American private equity investment firm. The group is understood to have offered $76 a share in cash for Starwood, which marks a 7.9% premium to the hotel chain's closing stock price on 11 March. The development boosted the Starwood stock by 7.78% on 14 March, when it closed at $75.90.
The offer acts as a counter to Marriott International's earlier offer of £8bn to acquire Starwood. While the current bid threatens the deal with Marriott, a vote on which is scheduled for 28 March, Starwood is allowed to discuss takeover offers with rival bidders up until 17 March.
While Marriott said on 14 March that it was committed to its takeover of Starwood, which would create the largest hotel company globally, with more than one million rooms, there is no assurance that the proposed Chinese takeover would materialise, one of the reasons being that it could fail to clear regulatory hurdles.
Anbang is known for its acquisitive nature. Just a few days ago, the insurance company agreed to acquire Strategic Hotels & Resorts, an American luxury hotels owner, from Blackstone Group. The deal was valued at about $6.5bn including debt. Anbang also acquired Waldorf Astoria, a historic landmark hotel in New York City for about $2bn, less than two years ago.
If the Anbang-Starwood deal materialises, it would be the largest US acquisition by a Chinese company. However, outside the US, Chinese companies have done far larger deals such as the acquisition of Swiss agriculture company Syngenta AG for $43bn.
According to Dealogic, the total value of foreign deals agreed by Chinese companies in 2016 equals $102bn. This is significant, considering the total value of such deals completed in 2015 by Chinese companies stood at $106bn. Analysts opined that the slowing Chinese economy and a weakening yuan are spurring Chinese companies into overseas deals.