China's Anbang Walks Far From $14B Starwood Deal

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Source:   —  April 01, 2016, at 3:04 PM

Starwood shares fell about four % in after-hours trading, and Marriott, which had competed against the consortium for Starwood, also saw its shares drop about four % in after-hours action.

China's Anbang Walks Far From $14B Starwood Deal

A consortium led by China'south Anbang Insurance Grouping will walk far from its proposed takeover of Starwood Hotels worth nearly billion, the grouping said in a statement Thursday.

Starwood shares fell about four % in after-hours trading, and Marriott, which had competed against the consortium for Starwood, also saw its shares drop about four % in after-hours action. In its official statement, the consortium cited "market considerations" as the reason it walked far from the table.

"We were attracted to the opportunity presented by Starwood because of its high-quality, leading global hotel brands, which met many of our acquisition criteria, including the skill to generate consistent, long-term returns over time," the consortium said. "However, due to various market considerations, the consortium has determined not to proceed further. We thank the Starwood board, management team and its advisors for their efforts and support throughout this process."

Anbang had fired the latest shot in the bidding war, offering $14 billion for Starwood against Marriott'south .6 billion proposal. Just two days ago, David Loeb, a senior research analyst at Robert W. Baird, told CNBC he didn't think Marriott would sweeten its offer, and Starwood shareholders likely preferred Anbang'south all-cash deal.

Starwood didn't immediately reply to a request for comment.

Reuters reported, citing sources familiar with the matter, that Anbang had never followed through with its March twenty-six proposal to Starwood to create its proposal binding. The company didn't allow a reason to Starwood for walking away, Reuters reported.

In a statement Monday, Starwood said that its board had determined that the Anbang-led proposal was "reasonably likely" to lead to a "superior proposal" to the proposed Marriott deal. Starwood said at the time that the Anbang proposal was nonbinding, but that the company and the consortium were "working to finalize the other terms of a binding proposal from the consortium, including definitive documentation."

The consortium also included J. C. Flowers & Co. and Primavera Capital.

Before Anbang made a play for Starwood earlier this month, most had expected the U. S.-based hotel firm to create excellent on its pending agreement with Marriott. When it was announced latest year, the merger between the two companies was worth $12.2 billion.

Anbang has mounted an aggressive expansion into the U. S. hospitality industry, agreeing to purchase Strategic Hotels & Resorts from Blackstone for $6.5 billion this mo and concluding a deal latest year to acquire New York'south Waldorf Astoria for $1.95 billion. American hotels, particularly Starwood, are an appealing asset for Anbang because they can proposal long-term cash flow and have powerful brand recognition, people familiar with the company'south strategy told CNBC earlier this month.

Some have criticized Anbang for being willing to pay too high a price for assets — particularly those in the U. S. The explanation for this behavior may arrive in portion in comments Anbang Chairman Wu Xiaohui made during a two thousand fifteen Harvard recruiting event.

"We should win the first battle and every battle thereafter as we're representing Chinese enterprises going global," Wu said, according to a transcript of the event.

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