Starwood Hotels and Resorts have given Marriott just hours in which to improve its multi-billion dollar takeover offer after receiving a higher offer of $13.2 billion from a Chinese Insurer group, Anbang.

At $78 a share Anbang, Primavera and JC Flowers have made an incredible all-cash offer, which the Sheraton chain’s US owner described as “fully financed”.

In November of last year, Marriott agreed to takeover Starwood in a cash and stock deal valued at $12.2 billion.  Now Marriott is down to the wire to increase its offer, although Starwood seem to be giving them every chance and said it would continue to “negotiate in good faith” with regards to any revised offer made.  Marriott’s share has since declined and is now only worth around $65.33 per share, loosing over $1.2 billion, according to Starwood.

With the economy in China continuing to grow strongly over the last decade, Anbang are just one of many companies deciding to invest into overseas companies.  Anbang paid $2 billion for the Waldorf Astoria in New York only 2 years ago and also recently agreed to buy Strategic Hotel & Resorts for $6.5 billion so this looks highly likely to go ahead.

The $78 per share offer from the Anbang conglomerate is $2 higher than an initial proposal made just 3 weeks ago, according to Starwood. The hotelier said that investors would be set to receive a $83.67 per share return if this deal went ahead by means of the $5.67 per share that Starwood shareholders would receive from the strategic spin-off.

In New York’s pre-market trading, Starwood’s stock shot up 5% compared to Marriott’s mere climb of just 1.3%.

Arne Sorenson, Chief Executive of Marriott said it’s “carefully considering its alternatives” as it scrutinises Anbang’s proposal.  This is the second difficulty Marriott have faced in its pursuit of the Starwood group in the last five months after being initially outbid by its smaller competitor, Hyatt.

Should Starwood take Anbangs offer and terminate the agreement it had with Marriott, it will be required to pay a compensation fee of $400 million.

Starwood’s US owner added that Anbangs offer had a “high degree of closing certainty.”

Posted on: March 30, 2016

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