China’s Anbang Insurance Group Co has raised its offer for Starwood Hotels & Resorts Worldwide Inc to almost $US14 billion ($A18.64 billion) in its latest challenge to the US hotel operator’s merger with Marriott International Inc.
The bidding war for Starwood has pitted Marriott’s ambitions to create the world’s largest lodging company with about 5700 hotels against Anbang’s drive to create a vast portfolio of high-yielding US real estate assets.
The acquisition of Starwood, owner of the Sheraton and Westin brands, by Anbang would be the largest ever by a Chinese company in the United States.
Anbang’s consortium, which includes private equity firms J.C. Flowers & Co and Primavera Capital Ltd, has offered $US82.75 per share in cash, in what is reasonably likely to be superior to Marriott’s deal, Starwood said on Monday.
Marriott’s latest cash-and-stock offer, which was announced on March 21, is currently worth around $US78 per share.
Starwood’s board has not yet changed its recommendation to its shareholders in support of the company’s merger with Marriott, Starwood said.
A vote for Starwood shareholders is scheduled for April 8.
Marriott declined to say if it would lift its offer but said it was confident the amended merger agreement with Starwood is best for both companies.
Starwood shares were trading up 2.54 per cent at $US84.20, while Marriott shares were up 4.1 per cent to $US71.46, as some investors hoped Anbang’s move would prompt it to walk away from an expensive deal.
Anbang’s latest offer values Starwood at 13.5 times earnings.
By comparison, peers Hyatt Hotels Corp and Hilton Worldwide Holdings Inc are trading at around ten times earnings.
To be sure, the Anbang offer is still cheaper than some of large real estate deals seen in the run-up to the 2008 financial crisis.
Buyout firm Blackstone Group LP’s $US26 billion leveraged buyout of Hilton in 2007 valued that company at 15 times earnings.