Beijing-based Anbang Insurance Group has scrapped its plans to purchase Starwood Hotels & Resorts Worldwide Inc. for $14 billion, which would have been the largest acquisition of a U.S. firm by a buyer from China.
Anbang had been caught in a tug-of-war with Marriott International Inc. to take over the popular lodging operator. On March 28, The Wall Street Journal reported that the Chinese group offered to raise its stakes to buy Starwood for $82.75 per share, following Marriott's earlier offer of $79.53 per share.
Anbang has made a name for itself worldwide with its track record of shopping for yield-producing firms.
In 2014, the auto and property insurer entered in a $1.6-billion deal to buy U.S.-based Fidelity & Guaranty Life. Additionally, it spent $1 billion on Tong Yang Life Insurance Co., a South Korea-based firm.
In its home court, the company owns stakes in China Minsheng Banking Corp. Ltd. and China Vanke Co.
Analysts said that the bid cancellation could shed some bad light on Chinese firms' attempt to acquire U.S.-based assets. CNBC reported that one of the possible reasons behind Anbang's decision to acquire Starwood at a seemingly overblown price is due to looming economic woes back at home.
"[B]eyond the prestige of owning so-called 'trophy' assets in the U.S., many have theorized that Anbang's offer was part of a larger trend of capital flight from China," said CNBC.
"China's economy has slowed over the last few years, and some have even contended that its period of impressive growth may be over," the report added.
Meanwhile, Anbang said in a statement, "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 group cited "market considerations" as the reason for its withdrawal.