The Real Deal New York

Three Chinese firms jockeying to buy Starwood Hotels

Potential deal for Stamford-based chain could be largest-ever Sino takeover of a U.S. company

October 28, 2015 08:15AM

From the left: The W New York Times Square and Starwood's Adam Aron

From the left: The W New York Times Square and Starwood’s Adam Aron

One of the world’s largest hospitality companies, Starwood Hotels & Resorts Worldwide, might soon be the object of the largest-ever takeover of a U.S. company by a Chinese firm.The Chinese government is in discussion with three companies – Shanghai Jin Jiang International Hotels; HNA, parent of Hainan Airlines; and China Investment Corp., a sovereign wealth fund – one of which will bid on the massive hotel chain.

The government plans to choose just one company to avoid a possible bidding war for Starwood, which owns over 1,200 properties worldwide and manages brands such Westin, W Hotels and St. Regis, unnamed sources told the Wall Street Journal.

It’s not yet clear what the bidders are willing to pay, but the amount is likely to exceed Starwood’s start-of-Tuesday valuation of $12 billion, the Journal reported.

The hotel firm’s stock price jumped 9.1 percent Tuesday to 74.81 on the news, its highest level since 2009. Starwood in April said it was exploring various options that included a sale or merger, largely as a reaction to having lagged behind competitors like Hilton and Marriott. Its longtime CEO, Frits van Paasschen, resigned in February and Starwood has been selling off hotel properties this year.

A potential deal would be the latest in a string of major hotel pickups by Chinese firms. Last year, the insurance giant Anbang bought the Waldorf-Astoria at 301 Park Avenue in Midtown for nearly $2 billion. And in February, Sunshine Insurance Group, bought the Baccarat Hotel at 20 West 53rd Street, then a Starwood property, paying $230 million.

“Chinese investors have been pretty aggressive in the hotel market over the last year or so,” said Lukas Hartwich, an analyst at Green Street Advisors LLC, told Bloomberg. “Starwood has some pretty powerful brands. It’s an attractive platform, especially if you don’t already own a platform with that kind of cachet.”
All three firms involved in a possible bid for Starwood are state-controlled or partly owned by the Chinese government. [WSJ]Ariel Stublerg