Skift Take
In a drama where the unexpected was always expected, this latest development certainly delivered. Let's see what happens next.
Anbang Insurance Group's consortium is dropping its bid to purchase Starwood Hotels and Resorts, leaving the door open for Starwood's deal with Marriott to go through.
The consortium issued a release, saying: “We were attracted to the opportunity presented by Starwood because of its high-quality, leading global hotel brands, which met many of our acquisition criteria, including the ability to generate consistent, long-term returns over time. However, due to various market considerations, the Consortium has determined not to proceed further. We thank the Starwood Board, management team and its advisors for their efforts and support throughout this process.”
Both Starwood and Marriott are holding a joint investor meeting and webcast on the morning of April 1 to discuss their combination.
Why Would Anbang Walk Away?
Many signs seemed to point toward Starwood eventually choosing Anbang over Marriott. The biggest sign? Cold, hard cash — nearly $13.8 billion worth. On Monday, March 28, Starwood issued a press statement saying it was currently engaged in conversations with Anbang about a new, unsolicited, and non-binding $13.8 billion offer that would likely lead to a "superior proposal."
There were however, some very significant challenges that Beijing-based Anbang and its consortium faced in acquiring Starwood Hotels. The biggest included gaining regulatory clearance in China and the U.S., not to mention what, if any, post-acquisition strategy Anbang would have for Starwood.
The fact that Anbang is based in China would possibly pose legal challenges if Anbang failed to honor its financing requirements. In an article for the New York Times, Steven Davidoff Solomon, a professor of law at the University of California, Berkeley, pondered whether Starwood could effectively sue Anbang if it were unable to hold up its end of the deal.
At its root, perhaps the biggest problem Anbang had in its long pursuit of Starwood was one thing: transparency. Although Anbang chairman Wu Xiaohui made a number of overtures to Starwood since last May—six to be exact—the problem with many of his offers was simply that he didn't have the financials, or details, to back them up.
In fact, during a Nov. 3 meeting with Starwood's interim CEO Adam Aron, now CEO Thomas B. Mangas, and Starwood's financial advisors, Wu had to end his meeting abruptly because Anb
