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$14-billion bid for Starwood hotels puts Chinese firm Anbang in spotlight

A $14-billion bid for Starwood Hotels and Resorts Worldwide Inc. surfaced Monday, putting a spotlight on Chinese firm Anbang Insurance Group and complicating a plan to meld Starwood and Marriott International Inc. into the world’s largest hotel company.

Starwood told Marriott on Friday that it received an unsolicited offer from a consortium led by Anbang, according to a statement released Monday by Marriott.

Starwood confirmed that it had received a proposal but did not name the lead company in the consortium.

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Anbang appears to be making big plays in the American hotel industry. In 2014, the insurer bought the New York Waldorf-Astoria hotel for $1.95 billion. At the time, the company indicated its interest in making more such deals, saying in a statement that it planned to “realize long-term stable investment return by investing in high quality real properties in North America.” 

On Saturday, there were reports of a $6.5-billion deal under which Anbang would acquire 16 luxury hotels owned by New York private equity firm Blackstone Group. The portfolio of hotels includes four Southern California properties: the Hotel del Coronado near San Diego, the Ritz-Carlton Laguna Niguel, the Montage Laguna Beach and the Loews Santa Monica Beach.

In the bid for Starwood, the hotel firm said, the consortium offered $76 in cash per Starwood share, as well as Interval Leisure Group Inc. common stock valued at about $5.50 per Starwood share.

In November, Marriott said it would acquire Starwood in a deal valued at about $12.2 billion. The new hotel company would have 5,500 hotels and more than 1.1 million rooms in more than 100 countries. Marriott owns brands such as Ritz-Carlton and JW Marriott, and Starwood is known for its St. Regis and Sheraton hotels.

Starwood and Marriott shareholders are to vote on Marriott’s proposal in two weeks. Marriott said it expected the deal to be completed by mid-2016.

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Starwood said its board of directors has not changed its recommendation to support the Marriott deal but “will carefully consider the outcome of its discussions with the consortium in order to determine the course of action that is in the best interest of Starwood and its stockholders.”

Marriott said it is “confident” that its deal with Starwood “is the best course for both companies.”

But Anbang also has motivation to buy. 

As China’s economy slows, Chinese companies are looking to diversify their assets outside their home market. The government has been encouraging companies to “go out.”

"These are turbulent economic times, and yet we see Chinese companies acting with confidence and continuing to make major moves in Europe and North America," said Michael DeFranco, chairman of the global mergers and acquisitions practice at law firm Baker & McKenzie. 

Even by Chinese standards, Anbang seems to have had a swift rise, apparently helped along the way by its connections to the corridors of power.

Anbang Insurance was originally Anbang Property Insurance, and its early investors were Shanghai Automotive Industry Corp., Sinopec and other big state-owned enterprises.

It started with about $75 million in 2004, and its assets reached $5.1 billion in 2009. Now it says that it has 30,000 employees, more than 35 million clients and more than $250 billion in assets, and that it is one of the largest insurance groups in China.

The insurer has significant stakes in some of China’s largest banks and other companies, including China Merchants Bank, Minsheng Bank, Gemdale Group, real estate developer Wanke, the bank ICBC and Sinohydro Co.

Chinese media have attempted to publish reports on what power players are involved with Anbang, but some of those reports have been taken offline shortly after being posted.

An investigation by the publication Southern Weekend found that those involved included Zhuo Ran, the granddaughter of China’s former “paramount leader” Deng Xiaoping; Zhu Yunlai, son of former premier Zhu Rongji; and Chen Xiaolu, son of Communist Party revolutionary military commander Chen Yi.

Masunaga reported from Los Angeles and Makinen from Beijing. Yingzhi Yang and Nicole Liu in The Times’ Beijing bureau contributed to this report.

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Copyright © 2016, Los Angeles Times

UPDATES

9:11 a.m.: This article was updated with background information about Anbang Insurance Group. 

8:35 a.m.: This article was updated throughout with Times staff reporting.

This article was originally published at 7 a.m.

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