By Alan Murray
March 29, 2016

Why is a Chinese insurance company paying top dollar – or more than top dollar – to acquire Starwood Hotels?

That’s a question the financial press is exploring this morning. Yesterday’s $14 billion cash bid from China’s Anbang Insurance values the hotel company at more than 13 times earnings. By comparison, companies like Hyatt (h) and Hilton (hlt) trade at 10 times earnings. Marriott’s (mar) last offer was $13.6 billion in cash and stock, and analysts say it would be unlikely – and probably unwise – for the hotel company to raise its offer.

Marriott can argue that by combining forces with Starwood (hot), it can create new efficiencies in operations, marketing, etc., that justify a premium price. But how to explain the higher bid from an insurance company, with no expertise in operating hotels?

Adding to the mystery is the fact that Anbang’s ownership structure is incredibly opaque. The Wall Street Journal has a story this morning that traces a significant chunk of the company’s ownership back to a car dealership in Jiangsu province. The Journal attempted to contact the investment company owned by the car dealership and reports that “the person who answered the phone hung up when asked about Anbang.” Other efforts to contact registered owners of the company turned up similar dead ends.

Anbang may be able to turn down beds and put chocolates on pillows as well as the next owner. But it does make you wonder. One theory is that the company is buying foreign assets as a currency hedge against a coming devaluation of the renminbi. It certainly wouldn’t be the only Chinese company looking for such a hedge. Meanwhile, Marriott’s best hope for prevailing now could be rumors that Chinese regulators may block the deal, using a rule that prevents Chinese insurance companies from investing more than 15% of their total assets abroad.

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