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Starwood Hotels bidding war escalates: China's Anbang offers $15 billion

Starwood Hotels bidding war escalates: China's Anbang offers $15 billion
Starwood Hotels & Resorts Worldwide Inc. is the owner of Sheraton and St. Regis hotels. The Sheraton Fort Lauderdale Beach Hotel is shown on July 25, 2011. (Wilfredo Lee / Associated Press)

The price for Starwood Hotels & Resorts Worldwide Inc. continues to rocket higher, with the latest bid from China's Anbang Insurance Group Co. and its partners crossing the $15-billion mark.

Starwood, whose properties include Sheraton hotels, San Francisco's Westin St. Francis and the St. Regis New York, said Monday that the offer from the Anbang group is "reasonably likely" to be superior to the one made last week by Marriott International Inc.

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Although Marriott's chief executive, Arne Sorenson, said in an interview at the time on CNBC that he didn't tell Starwood the latest offer was Marriott's last and best, some industry analysts believe this may be a fight Marriott can't win.

For Anbang, they say, Starwood isn't valued so much for its brand name as much as it is for its location: outside China.

That has been the view of Canaccord analyst Ryan Meliker, who told clients in a research note, "We don't think [Marriott] can go higher, and we would question it if they did."

Anbang and a number of Chinese companies have been seeking to park money in more stable locations, such as U.S. real estate, particularly with signs of slowing growth at home growing ever clearer.

The blitz by Anbang into the U.S. real estate market has repeatedly knocked askew the ambitions of Marriott, which has been trying to add Starwood's posh stable of hotels to its portfolio since last year.

Marriott bid $12.2 billion for the Greenwich, Conn.,-based hotel firm in November, and most had expected that the deal would go through, making the combined company the biggest hotel firm in the world.

But few had realized the ambition or motivation of Anbang, even though the Chinese company made a big splash in the U.S. real estate market two years ago when it acquired the famed Waldorf Astoria in New York for almost $2 billion.

Anbang's goals became a bit clearer this month — even before it challenged Marriott for control of Starwood — when it laid down $6.5 billion to acquire Strategic Hotels & Resorts Inc., which owns several high-end properties including the Loews Santa Monica Beach and the historic Hotel del Coronado near San Diego.

Marriott said Monday that it remains confident Starwood would be better off with its bid. CEO Sorenson has said the tie-up would create a global powerhouse with a loyalty program unmatched by any other hotel.

And Starwood said Monday that its board has not changed its recommendation in support of a deal with Marriott, though it is reviewing Anbang's latest offer.

The newest offer from Anbang is for $88.66 per Starwood share, or $15.03 billion. That tops Marriott's latest bid of $14.41 billion.

Anbang's offer includes $82.75 per share in cash, which is an increase of $4.75 per share from its previous bid. The bid also includes $5.91 in stock for a spinoff of a vacation business.

Whoever gains control of Starwood will likely be entering Cuba as well. This month, Starwood became the first U.S. hotel operator to gain access to the country.

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