STARWOOD Hotels & Resorts Worldwide Inc. on Friday said a US$13 billion cash offer from China’s Anbang Insurance Group Co. was superior to one from Marriott International Inc., setting the stage for the largest-ever deal by a Chinese company in the United States.

    The operator of Sheraton and Westin hotels said the Chinese insurer’s offer beat Marriott’s previously agreed cash and stock offer by nearly 15 percent, and that it planned to scrap the proposed deal with the rival hotel chain.

    Anbang has been on a U.S. hotel buying spree as Chinese insurers rush to acquire cash-generating assets as they struggle to keep up with the policy liabilities of the country’s aging population. U.S. assets are also seen as a good hedge against weakness in the Chinese yuan currency.

    The Anbang-led consortium — which also includes private equity firms J.C. Flowers & Co. from the United States and Primavera Capital from China — has bid US$78 per share in cash, or US$13.16 billion overall, based on shares outstanding as of Feb. 19. Anbang’s bid is binding and fully financed, Starwood said.

    At Thursday’s close, Marriott’s bid for Starwood was worth US$68.06 per share, or around US$11.5 billion overall.

    Starwood will have to pay a US$400 million breakup fee to Marriott if it walks away from their deal.

    Marriott, which has until March 28 to counter Anbang’s offer, said it was considering its options.

    Dan Wasiolek, a hotel industry analyst at Morningstar, said Marriott could still counter with a higher offer.

    “Marriott can increase their offer because they have the balance sheet flexibility,” he said, suggesting the larger rival hotel company could sweeten its offer by US$700 million in cash.

    If Anbang’s offer is successful, it would boost the company’s reputation as one of China’s top corporate acquirers, adding Starwood to its stable with its nearly 1,300 hotels in about 100 countries. Starwood brings with it several well-regarded hotel brands as well as a loyal business customer base.

    The offer follows Anbang’s US$6.5 billion deal struck the week before last for Strategic Hotels & Resorts Inc. and its US$2 billion purchase of New York’s iconic Waldorf Astoria hotel last year.

    John Paulson, president of hedge fund Paulson & Co., Starwood’s largest shareholder, welcomed Anbang’s sweetened offer, saying it “better reflects the value of Starwood.” He called the Chinese company a “proven, sophisticated buyer of related assets.”

    Beijing-based Anbang’s bid for Starwood epitomizes its meteoric rise since it was founded in 2014 with an initial focus on car insurance.

    Thanks to a spate of dealmaking at home and abroad, privately held Anbang now manages more than 1.9 trillion yuan (US$292.3 billion) in assets, according to its website.

    A deal with Anbang would likely face a review by the U.S. Committee on Foreign Investment in the United States (CFIUS), an interagency panel that reviews deals to ensure they do not harm national security.

    A CFIUS probe would take around 10 weeks and would focus on the proximity of Starwood’s several hundred U.S. hotels to critical facilities and the protection of customers’ privacy, such as credit card data and information that passes through hotel WiFi, said a source close to the deal.

    Anbang won approval to buy the Waldorf Astoria last year and to buy annuities and life insurer Fidelity & Guaranty Life just last week, giving it confidence that it can also win approval for the Starwood deal, the source said.

    (SD-Agencies)