Anbang drops bid to buy Starwood, clearing way for Marriott

PUBLISHED : Friday, 01 April, 2016, 10:52am
UPDATED : Friday, 01 April, 2016, 10:52am

Anbang says it is dropping its US$15 billion offer to acquire Starwood Hotels, citing various market considerations and ending a bidding war for the parent of St. Regis and Sheraton resorts.

The China-based insurance company, which was leading a consortium of potential investors, said that it won’t proceed further, an abrupt announcement that sent shares of Starwood down 4 per cent in late trading Thursday.

Starwood Hotels & Resorts Worldwide Inc, based in Stamford, Connecticut, said its board continues to support its existing deal with Marriott, which initially offered US$12.2 billion for Starwood in November. That has since grown to more than US$14 billion.

Under the existing agreement, Starwood shareholders will get US$21 cash and 0.80 of a Marriott Class A share for each Starwood share held. Starwood shareholders will own about 34 per cent of the combined company, which, with 30 brands, would be the world’s largest hotel chain.

Marriott International Inc reaffirmed that its offer creates significant economies of scale and provides shareholders a better deal over the long term. The Bethesda, Maryland, company owns brands including the Ritz-Carlton and Renaissance Hotels.

Starwood shareholders are scheduled to vote on the merger April 8.

In after-hours trading, Starwood shares fell 4.4 per cent to US$79.75. Marriott shares slid 5 per cent to US$67.64.