Bottom line: A veto threat by China’s insurance regulator ultimately killed Anbang’s bid for Starwood, but the Chinese insurer is likely to pursue more mega-purchases in the more traditional overseas real estate sector this year.
Starwood abandoned at altar by Anbang
In a sudden and unexpected turn in the bidding war for hotelier Starwood (NYSE: HOT), Chinese suitor Anbang has suddenly bowed out of the contest without explanation, paving the way for a merger with US suitor Marriott (NYSE: MAR). Many are marveling at this sudden turn of events, since Anbang earlier this week had submitted an all-cash bid that was 6 percent higher than Marriott’s latest offer for Starwood, operator of the Sheraton and Westin hotel brands.
But anyone in China might say they saw this coming, based on a couple of local media reports from sources at Anbang and China’s insurance regulator. The first of those reports came last week, and saw one of China’s top financial media report that the Chinese insurance regulator was likely to veto a deal over concerns about the size of the investment. That was followed by another report based on comments from an Anbang insider this week, saying the regulator would have no grounds to veto such a deal. Read Full Post…
Bottom line: Starwood’s board is likely to reject a new raised offer for the company from Anbang and keep its recommendation to accept a lower bid from Marriott, which offers more certainty of closing a deal and also better long-term prospects.
Anbang ups the ante in Starwood bidding war
The latest development in the bidding war for US hotelier Starwood (NYSE: HOT) looks both expected and unexpected, with word that Chinese suitor Anbang has upped its offer to top the most recent bid from rival Marriott (NYSE: MAR). I say the move looks expected based on my previous assessment that Anbang looked determined to buy Starwood at any price. But the new bid is also a bit unexpected because Chinese media reported last week that the nation’s insurance regulator was likely to veto such a deal, which seemed to show Anbang might drop its pursuit of the purchase that is now valued at $14 billion.
The latest developments also include a response from Marriott, which seems to be saying “enough already”. That would indicate Marriott doesn’t plan to raise its latest bid, which is about 6 percent lower than the new one from Anbang, and instead let Starwood’s board decide which offer to recommend. Read Full Post…
Bottom line: Anbang is almost certain to make a new counter bid for Starwood above Marriott’s latest offer, and will ultimately win the bidding war due to its determination to make an acquisition at any cost.
Marriott trumps Anbang bid for Starwood
The sudden bidding war for US hotel operator Starwood (NYSE: HOT) is rapidly intensifying, with hometown suitor Marriott (NYSE: MAR) sharply raising its original bid for the company to trump a more recent offer from Chinese insurer Anbang. The move surprised many, including myself, since the new bid represents a 10 percent raise from Marriott’s earlier offer for Starwood made late last year. I had predicted that Marriott might raise its original bid as much as 5 percent, but that it would ultimately shy away from getting into a real bidding war.
Starwood has said it will accept Marriott’s new offer and even signed a deal. But we should also point out it said just days ago it also said it would accept Anbang’s offer as well. So the major question now is whether Anbang will try to top Marriott with a new bid before an April 8 deadline. I suspect the answer to that question is “yes”, since Anbang seems determined to buy Starwood at any price. Read Full Post…
Bidding wars follow certain principles, but the recent battle for US hotel operator Starwood (NYSE: HOT) between local rival Marriott (NYSE: MAR) and Chinese insurer Anbang is quickly diverging from one of the most central rules. In a move that surprised many, including myself, Anbang has suddenly upped its bid for Starwood, increasing its original offer that was already 12 percent higher than Marriott’s original and only bid dating back to last year.
In all my years of covering M&A and bidding wars, this is the first time I can recall of a company increasing its own bid that wasn’t in response to a rival counter bid. The strange move probably reflects Anbang’s worries that its original offer might get rejected by Starwood, which I previously predicted would choose Marriott as a more dependable partner despite its lower offer. Now we’ll have to wait to see if Marriott responds by raising its original offer, which is now about 15 percent lower than Anbang’s latest bid. Read Full Post…
Bottom line: Anbang’s hiring of a consultant to gauge shareholder interest in its bid for Starwood indicates a lack of confidence in reaching a deal with Starwood’s management, and shows its offer is ultimately likely to fail.
Starwood preparing to reject Anbang?
Chinese insurer Anbang is quickly learning that money can’t buy you everything, following its surprise mega-bid for US hotel giant Starwood (NYSE: HOT), operator of the Sheraton and Westin brands. That’s my latest interpretation, following reports that Anbang has hired a professional proxy solicitor to gauge investor sentiment towards its $12.8 billion bid for Starwood that trumped a previous offer by US hotel giant Marriott (NYSE: MAR).
I said earlier this week that Starwood’s board and management were ultimately likely to reject the Anbang bid, and opt for a union with a partner like Marriott that could ensure its longer-term future. (previous post) This latest move implies that Anbang may be getting a cool reception from Starwood’s management, and is testing the waters to potentially take its bid directly to Starwood’s shareholders in what would become a hostile takeover bid. Read Full Post…
Bottom line: The arrest of a leading private equity executive for insider trading and Jin Jiang’s new fund-raising represent the latest efforts to clean up China’s unruly stock markets and make them more attractive to international investors.
Private equity giant detained for insider trading
I don’t normally write too much about China’s domestic stock markets due to their chaotic nature, but a couple of news items are shining a spotlight on the ongoing major task of cleaning up these unruly venues as they try to become more international. The larger of the 2 stories is making big waves here in China, where the one of the nation’s best-known private equity chiefs has been detained for insider trading. The second item has recently acquisitive hotel operator Jin Jiang (HKEx: 2006; Shanghai: 600574) preparing for a major new fund raising, as it tries to clean up its own financial house in a bid to become China’s first global hotel operator.
Each of these items is quite different, though both are focused on different aspects of cleaning up a domestic stock market that often seems more like the Wild West than a place for serious investors. Share price manipulation is common practice in the market, which is reflected in the insider trading story. The Jin Jiang story reflects the murky relationships that often exist between listed companies and government entities, making it nearly impossible for serious investors to clearly understand a company’s financial health. Read Full Post…
Bottom line: A Chinese buyer could have a strong chance of winning the bidding for US hotel operator Starwood, with CIC most likely to emerge as Beijing’s preferred candidate among a trio of interested local buyers.
Chinese buyers eye Starwood Hotels
Just a day after China’s 2 leading travel sites put aside their bitter rivalry and formed a major new alliance, we’re getting word of yet another major deal in the hot tourism sector. This time media are saying 3 Chinese buyers are eyeing Starwood (NYSE: HOT), one of the world’s top hotel operators. The 3 potential bidders include 2 of China’s leading private equity investors, China Investment Corp (CIC) and HNA Group. The third is one of China’s top hotel operators, Jin Jiang (HKEx: 2006; Shanghai: 600574), which has been on a buying spree recently both at home and abroad.
If one of the 3 succeeds, the deal would mark the largest purchase ever of an offshore asset by a Chinese buyer, based on Starwood’s latest market value of $15 billion. Word of the deal comes just a day after leading domestic online travel agents Ctrip (Nasdaq: CTRP) and Qunar (Nasdaq: QUNR) buried the hatchet in their bloody battle for share in China’s fast-growing travel market. A Starwood deal would also come less than a week after US-British cruise operator Carnival (NYSE: CCL) formed a new joint venture with 2 Chinese partners. (Chinese article) Read Full Post…
Bottom line: The record-breaking purchase of an Australian trophy hotel by a China buyer is part of a growing Chinese foreign real estate buying binge, which could ultimately produce a global bubble.
Chinese insurer buys Sydney Sheraton
China’s nascent but rapidly growing appetite for foreign hotels continues to grow, with word that another previously unknown Chinese insurer has snapped up a trophy property in Australia for a record price. In this case it’s China’s Sunshine Insurance Group that’s buying a major Sheraton property in Sydney from global giant Starwood Hotels (NYSE: HOT) for an inflated price of A$463 million, or about $400 million. This sale is the third of a major western hotel asset to a Chinese buyer in just the last 2 months, and looks a lot like similar waves from the past 30 years that saw Asian buyers purchase trophy western real estate at inflated prices. Read Full Post…
China’s broader domestic travel market may be quickly getting saturated, but that hasn’t stopped leading online travel agent Ctrip (Nasdaq: CTRP) and global hotel giant Starwood (NYSE: HOT) from seeking out new investment opportunities in more niche-focused areas. News involving the former will see Ctrip purchase a cruise liner from global giant Royal Caribbean (NYSE: RCL) to capitalize on the rising popularity for ocean cruises among Chinese vacationers. The latter news bit will see Starwood, owner of the Westin and Sheraton hotel brands, open an ambitious 4 new resorts on the tourist-friendly Hainan island over the next 5 years. Read Full Post…
China’s building economic slowdown isn’t dampening enthusiasm from hoteliers, with word that Starwood (NYSE: HOT), operator of the Sheraton and Westin chains, is about to double the number of its top-end luxury properties in the market. Starwood’s announcement comes just 3 months after US rival Hyatt (NYSE: H) announced its own major China expansion. (previous post) I should be fair and point out quickly that Starwood’s latest expansion isn’t all that large in terms of actual numbers, involving the opening of just 4 new properties. I should also point out that this kind of plan was probably the result of at least 3 or 4 years of planning, meaning work began well before China’s current economic slowdown. Read Full Post…
