Marriott, Starwood shares plunge after Angbang abandons $14 billion bid

Investing.com - Investing.com -- Shares in Marriott International (NASDAQ:MAR) and Starwood Hotels & Resorts Worldwide (NYSE:HOT) fell sharply in after-hours trading after Chinese company Angbang Insurance Group abandoned a $14 billion bid to purchase Starwood on Thursday evening, according to a report from the Dow Jones Newswire.
The surprising move came several days after Marriott reportedly declined to sweeten its $13.6 billion takeover attempt earlier this week in a cash and stock offer which would have amounted to $79.53 a share. An Angbang-led consortium, which included private equity firms J.C. Flowers & Co. as well as Primavera Capital, increased its offer to $82.75 a share in its latest attempt. If completed, the deal would have been the largest-ever purchase of a U.S. company by a Chinese firm.
Marriott initially announced that it had acquired Starwood, the parent company of Sheraton, Westin and W Hotels, last November in a $12.2 billion deal. Angbang, a Chinese holding company whose subsidiaries mainly engage in insurance, banking and financial service transactions, entered the bidding process shortly after, triggering an aggressive pricing war with Marriott. In 2014, Angbang purchased the Waldorf Astoria Hotel from Blackstone (NYSE:BX) for nearly $2 billion.
"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," the consortium said in a statement. "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."
In a statement released on Thursday night, Starwood chairman of the board Bruce Duncan said Starwood continues to unanimously support a deal with Marriott, which would create the world's largest hotel chain.
"Throughout this process, we have been focused on maximizing stockholder value now and in the future," Duncan said. "We continue to be very excited about the combination of our two companies and are committed to completing this deal in an expeditious manner. We are confident Starwood stockholders will support a merger that will create the world's best and biggest hotel company and which offers significant long-term upside for not only our stockholders, but also our company and associates."
Shares in Marriott plunged 3.57 or 5.02% to 67.61 in after-hours trading, while shares in Starwood plummeted 3.53 or 4.23% to 79.90.