Marriott International's $12.2 billion plan to take over Starwood Hotels & Resorts may be complicated by a competing offer, according to statements released Monday by the two hospitality companies.
Starwood said it received an unsolicited offer from a group of companies to buy the Stamford, Conn.-based hotelier for $12.8 billion, or $76 per share, in cash. That represents a 7.9 percent premium on the stock's Friday closing price of $70.42.
The consortium of potential investors is led by China's Anbang Insurance Group, which last year purchased the Waldorf Astoria New York hotel for $1.95 billion from Hilton Worldwide. Anbang is also closing in on a deal to buy Strategic Hotels & Resorts, a Chicago-based company that owns luxury hotels, the Wall Street Journal reported Sunday.
"Anbang is really the big unknown," said Jim Butler, head of global hospitality and Chinese investment groups at the law firm Jeffer Mangels Butler & Mitchell in Los Angeles. "They spent a lot of money on the Waldorf and made a big splash, but nobody knows who they are, what they're going to do or what this all means."
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Chinese investors have begun buying up U.S. real estate in recent years amid worries of an economic slowdown in the world's second-largest economy. Beijing-based Anbang, which began as a car insurance company in 2004, has rapidly expanded in recent years, buying up insurance firms and banks in Belgium, South Korea, the Netherlands and the United States.
In November, Bethesda, Maryland-based Marriott announced plans to buy Starwood in a cash-and-stock deal that would make it the world's largest hotel company.
Marriott said it had given Starwood permission to engage in discussions with Anbang until the end of the day Thursday.
"Starwood stated today that its Board of Directors has not changed its recommendation in support of Starwood's merger with Marriott," Marriott said in a statement Monday.
If Starwood were to end its agreement with Marriott or withdraw its recommendation to stockholders to vote in favor of the deal, the company would be obligated to pay Marriott a $400 million termination fee in cash, according to Marriott.
Shareholders of Starwood and Marriott are set to vote on the proposed deal on March 28. If the purchase goes through, the combined company would have 30 brands, 1.1 million rooms and nearly $20 billion in annual revenue.
Starwood oversees nearly 1,300 properties over 11 brands, including the St. Regis, Sheraton and W Hotels. Marriott, meanwhile, has more than 4,000 properties.