The bid by Anbang Insurance Group Co. came just days after the insurer agreed to buy U.S. luxury hotel owner Strategic Hotels & Resorts Inc. from Blackstone Group LP for about $6.5 billion including debt. Less than two years ago, it struck a deal to purchase the historic Waldorf Astoria in Manhattan for nearly $2 billion.
Chinese companies have lately landed takeover agreements for everything from Swiss agriculture company Syngenta AG —at $43 billion, the biggest such deal ever—to General Electric Co. 's appliance unit and several semiconductor makers. In all, Chinese companies have agreed to $102 billion in foreign deals this year, nearly even with the record $106 billion for all of 2015, according to Dealogic. Anbang's deal for Starwood would represent China's biggest purchase of a U.S. company.
Analysts say the slowing Chinese economy is helping drive companies overseas, as Chinese companies seek higher-yielding assets and try to upgrade the country's industries. A weakening yuan also may be spurring companies to pursue deals before a further fall in the currency reduces their buying power overseas.
A representative from Anbang declined to comment.
Underscoring the ferocity of the push, a number of the takeover bids have been for companies that are already under contract with others. In January, for example, Zoomlion Heavy Industry Science & Technology Co. said it offered to buy U.S. crane-maker Terex Corp. for about $3.3 billion, in an attempt by the Chinese company to bust up an existing deal between Terex and Finland's Konecranes Oyj . Fairchild Semiconductor International Inc. this year rejected a Chinese takeover bid after it had agreed to be bought by ON Semiconductor Corp. for $2.4 billion.
Several Chinese companies have expressed interest in Starwood since the hotel company announced last spring that it was exploring strategic alternatives. Lodging giant Shanghai Jin Jiang International Hotels Group Co. , HNA Group, parent of Hainan Airlines Co. , and the sovereign wealth fund China Investment Corp. each presented separate proposals to the Chinese government seeking its approval for an approach before the Marriott deal was set, according to people familiar with the matter.
Chinese investors have sought to buy U.S. and European properties that stand to benefit from a boom in Chinese abroad.
There is no guarantee a Chinese deal for Starwood will materialize or that regulators would bless it.
Indeed, there has been a groundswell of political opposition this year to Chinese takeovers. But heartening proponents of Anbang's bid for Starwood, U.S. authorities allowed the company's purchase of the high-profile Waldorf.
A group including Anbang offered to pay $76 a share in cash for Starwood, the owner of the Westin and Sheraton brands among others. That is a 7.9% premium to Starwood's closing stock price Friday.
Marriott in November agreed to pay cash and stock for Starwood that was worth $63.74 as of Friday.
Shares of Starwood jumped 7.8% to $75.93 in 4 p.m. trading in New York, while Marriott rose 3% to $70.93.
Starwood is permitted to talk with rival bidders until March 17. Shareholders of Starwood and Marriott were scheduled to vote on the deal on March 28.
Marriott said Monday that it is committed to its deal for Starwood. The deal would create the No. 1 hotel company globally—with more than one million rooms—and bring together 30 brands across all lodging segments, from Starwood's higher-end W and St. Regis hotels to Marriott's limited-service offerings like Courtyard by Marriott and its extended-stay chain Residence Inn.
Once a provincial car insurer, Anbang has emerged from obscurity to become one of China's most aggressive overseas acquirers. The company has spent billions purchasing part or all of insurers in South Korea, Europe and the U.S., as well as taking stakes in listed Chinese developers, a bank, a traditional Chinese medicine maker and a wind turbine manufacturer. While it ranks outside the top 10 of Chinese insurers by premiums, the Beijing-based company has done nearly $28 billion worth of deals, according to Dealogic, with most of those acquisitions of foreign companies and coming in the past two years.
Anbang's chief executive, Wu Xiaohui, last year said his investment team had traveled the equivalent of a round trip journey from the Earth to the moon hunting for deals. "We must win the first battle and every battle thereafter as we are representing Chinese enterprises going global," Mr. Wu told Harvard students in a speech.
To fund its ambitions, Anbang has turned to sales of high-yielding investment products, an unusual source for a Chinese insurer. In recent months, funds from sales of financial products to investors have outstripped cash taken in from its namesake insurance businesses, according to a review of company documents seen by The Wall Street Journal.
In the first three-quarters of 2015, Anbang Life raised 51.1 billion yuan ($7.9 billion) from selling the investment products, compared with 45.4 billion yuan in insurance premiums. By contrast, state-owned China Life Insurance Co. , the country's largest life insurer by premiums, collected 10.4 billion yuan from sales of wealth-management products in the same period, compared with 305 billion yuan worth of premiums.
Anbang's partners in the bid include Primavera Capital Group and J.C. Flowers & Co. Primavera is a China-based private-equity firm founded by Chinese deal maker Fred Hu, the former chairman for Greater China at Goldman Sachs Group Inc. A prominent investment banker and economist, Mr. Hu led Goldman's $2.9 billion deal to take a 5% stake in Industrial & Commercial Bank of China Ltd.
Mr. Hu has built ties with a range of China's most important financial figures.
Primavera was also an investor in Alibaba Group Holding Ltd. before its initial public offering as part of a financing package raised to repurchase half of Yahoo Inc. 's stake in Alibaba. Mr. Hu's role in that deal and close relationship with Alibaba Executive Chairman Jack Ma won Primavera a coveted investment in Alibaba affiliate Ant Financial Services Group, China's most valuable Internet finance company, last year. Primavera and J.C. Flowers didn't respond to requests for comment.
Source: Wall Street Journal by Rick Carew, Julie Steinberg and Joshua Jamerson | Photo: Reuters
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