Three Chinese suitors show interest in Starwood Hotels

Owner of St Regis and Sheraton brands has indicated it is considering a sale

PUBLISHED : Wednesday, 28 October, 2015, 5:51pm
UPDATED : Thursday, 29 October, 2015, 8:19am

China's sovereign wealth fund and two big Chinese companies have expressed interest in Starwood Hotels & Resorts Worldwide, joining other potential suitors from around the world, a source familiar with the matter said on Tuesday.

Starwood Hotels, the owner of the St Regis and Sheraton hotel brands, has indicated it is considering a sale, and its highly prized collection of properties has also garnered interest from wealthy Middle Eastern investors and other global firms, the person said.

Lodging giant Shanghai Jin Jiang International Hotels, Hainan Airlines’ parent HNA Group and sovereign wealth fund China Investment Corp (CIC) have expressed interest in Starwood, according to the source.

Watch: US hotel company Starwood being wooed by China hotel groups, who are they?

The three Chinese entities have submitted proposals to the central government over the past two months to allow them to compete to buy Starwood, the Wall Street Journal reported, citing sources.

Beijing was expected to select a single bidder in the next few weeks, it said. The central government only wanted one bidder to avoid driving the price up through competitive bidding, the paper said.

Starwood shares rose as much as 12.5 per cent to US$77.10 on Tuesday, giving the company a market value of about US$13 billion.

Starwood said it did not comment on market rumours or speculation.

Shanghai Jin Jiang International Hotels, HNA and CIC did not respond to requests for comment.

In the past, Chinese companies have bought other hotel properties, most notably the Anbang Insurance Group's purchase of New York's Waldorf Astoria last year, without objection from the US government.

The US government was unlikely to step in and stop the proposed transaction, although it might shift sensitive meetings out of Starwood properties or ask for particular hotels to be sold if they were near sensitive military institutions, said Paul Marquardt, a Cleary Gottlieb lawyer who is an expert on foreign investment in the United States.

Starwood reached out to potential bidders including InterContinental Hotels Group, Wyndham Worldwide and sovereign wealth funds in July, three months after it decided to explore a sale.

InterContinental said then that it was “not in talks with Starwood with a view to a combination of the businesses”, while Wyndham had declined to comment.