The rise and fall of Anbang’s bid for Starwood

Offer worth $14B fell apart over Chinese firm's opaque financing, regulatory approval

TRD New York /
Apr.April 04, 2016 11:07 AM

Financing and regulatory questions, along with an odd negotiating approach, ultimately doomed Anbang Insurance Group’s bid for Starwood Hotels & Resorts.

Anbang retracted its $14 billion bid last week for the hospitality group – which includes the St. Regis, W, and Westin brands – in the face of Starwood’s demands for hard guarantees that the deal would actually close, citing “various market considerations.”

Those questions arose from the beginning of Anbang’s involvement with the sale last year. The massive Beijing-based insurer withdrew from the initial bidding round, because it declined to provide a specific written offer, as well as specific financing plans, the Wall Street Journal reported.

Starwood ultimately accepted Marriott International’s $12.2 billion cash and stock offer.

In March, Anbang returned, ultimately presenting an offer then worth $13.2 billion, along with a letter of credit from China Construction Bank for the full amount.

To allay its regulatory concerns, Starwood demanded Anbang – owned by 39 diverse corporate shareholders, all based in China – promise to pay even if the deal was blocked by Chinese officials. Anbang, in an exceedingly rare move demonstrating its apparently commitment, agreed.

After Marriott topped that bid, offering $13.6 billion, Anbang came back with $14 billion. At that level though, the firm – whose oddly-timed meetings and occasional radio silence continually flummoxed Starwood’s negotiators – was apparently unable to follow through with financing and regulatory guarantees.

“It was a simple and prudent commercial decision,” Fred Hu, chairman of one of Anbang’s partner in the bid, Primavera Capital Group, told the Journal. [WSJ]Ariel Stulberg

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