A slew of Chinese suitors are jockeying for the rights to acquire Starwood Hotels & Resorts Worldwide, and any successful bid could result in the largest Chinese takeover of a U.S. company.
Starwood Hotels, owner of 1,200 properties and prestigious hotel brands such as W, the St. Regis and the Sheraton, is in the midst of a strategic review, reported The Wall Street Journal, and sources are open to merger bids. This has attracted Chinese sovereign wealth fund China Investment Corp, hotel group Shanghai Jin Jiang International Hotels (Group) Co. and conglomerate HNA Group. All three companies have some sort of Chinese government control or investment in their corporate structure.
There can be only one winner, however, as each has presented a proposal to the Chinese government over the past two months for approval, sources told the Journal. China will then allow only one bidder for Starwood Hotels, in an attempt to put a ceiling on the possible bid price.
They will have a host of contenders for the acquisition, however. Rival hotel chain Hyatt is said to be in advanced talks to buy Starwood in a cash and stock agreement, reported CNBC, while rich Middle-Eastern investors are also said to have expressed an interest in entering the bidding war, said Reuters.
If a Chinese company succeeds, it could dwarf the $5.6 billion paid by CIC for a 9.9% stake in Morgan Stanley, which stands as the largest dollar investment from China in a U.S. company. The market cap of Starwood Hotels currently stands at around $13.7 billion, and any bid would come at an additional premium to that.
This also continues significant Chinese investments in the U.S. property sector over recent years. Anbang Insurance Group shelled out around $2 billion for the famed Waldorf-Astoria hotel in New York, and another Chinese insurer paid around $230 million for New York’s Baccarat Hotel. In a Deloitte study, from January 2005 to March 2014, Chinese investors made direct acquisitions of $8.5 billion in U.S. commercial real estate.