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Updated 8:47 AM EST, Fri, Mar 05, 2021

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Marriott Hotel Less Likely to Outbid Anbang - Analysts

Marriott Inc. less likely to outbid China's Anbang for Starwood Hotels

(Photo : Getty Image) Starwood has reportedly accepted Anbang Insurance's $13.2 billion offer on March 18 and has given Marriott some leeway until March 28 for a counter proposal.

Hotelier Marriott International Inc, may have to raise its bid for Starwood Hotels & Resorts Worldwide Inc. as it is less likely to outbid Chinese insurer Anbang, experts said.

Starwood has reportedly accepted Anbang Insurance's $13.2 billion offer on March 18 and has given Marriott some leeway until March 28 for a counter proposal. Anbang and its partners, Primavera Capital and J.C. Flowers & Co., agreed to pay Starwood $78 per share in cash, topping Marriott's cash-and-stock deal last year at about $69.50 per share.

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According to David Loeb of Robert W. Baird & Co. in a March 18 research note to investors, Starwood is anticipating that Marriott will propose a counteroffer since it has not cancelled the scheduled shareholders meeting on March 28.

"We believe Marriott's revised bid for Starwood's hotel business will have an implied valuation of less than $78 a share. We do not expect Marriott to engage in a protracted bidding war."

Meanwhile, Peng Liu, a professor at Cornell University School of Hotel Administration, does not anticipate Marriott to join a bidding contest as well, noting that it can still become a great company even without the world's largest hotel management company title.

Analysts, however, admitted that it is unclear if the merging will attract an official review from the Committee on Foreign Investment in the United States (CFIUS), an inter-agency tasked to review foreign investment implications to the national security of the establishments and operations across the US.

Michael Wessel, US-China Economic & Security Review Commission commissioner, believes that CFIUS will have a role to play because of Starwood's significant number of properties that may be near or within critical government facilities.

He said that law officials will determine whether the buyout will raise national security issues, and granting there is a foreseen threat, "appropriate mitigation plans can be implemented to protect national security interests. That may or may not require assets to be removed from the transactions."

On the other hand, Anbang has no problems with regard to CFIUS' process, adding that it already had closed two previous deal review including its acquisition of New York's Waldorf Astoria Hotel and Fidelity Guaranty and Life. 

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