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China's Anbang ups bid for Starwood, vying with Marriott

The Castle Hotel -- part of the luxury Starwood chain -- in the Chinese seaport city of Dalian

Starwood Hotels & Resorts said Monday it was weighing an improved takeover bid from a group led by Chinese insurer Anbang that trumps its agreed deal with Marriott International.

In the latest turn in the bidding war for the US hotel operator, Starwood said the consortium led by Anbang Insurance gave a non-binding offer on Saturday of $82.75 per share, an all-cash deal valued at $14 billion.

That tops Marriott's bid which the Starwood board is still recommending, Starwood said in a statement. Marriott's cash-and-stock offer was worth $13.6 billion when Starwood said on March 21 that it had accepted its sweetened bid.

Starwood said that it had received an improved offer from Anbang on Saturday of $81 per share but that following discussions, the consortium sweetened it again, to $82.75.

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Starwood said the consortium's offer is "reasonably likely" to lead to a 'Superior Proposal'" as defined in its merger agreement with Marriott.

"There can be no assurance that discussions will result in a binding proposal from the consortium, that the Starwood Board will determine that any such proposal is a 'Superior Proposal' or that a transaction with the consortium will be approved or consummated on any particular terms or at all," Starwood said in a statement.

Anbang is teamed up with China-based Primavera Capital and US private-equity investor JC Flowers & Co. as it seeks to snare Starwood, once again swooping in to attempt to wrest the company from Marriott's grasp.

With assets of $254 billion, the deep-pocketed Anbang is on a shopping spree in the US hotel sector after scooping up the landmark Waldorf Astoria Hotel in Manhattan for nearly $2 billion in 2014.

Last week it announced the $6.5 billion purchase of Strategic Hotels & Resorts, 16 luxury properties in the US including the JW Marriott Essex House in Manhattan and the Hotel Del Coronado in San Diego.

Starwood and Marriott separately announced that their stockholder meetings to consider their merger would convene Monday as previously announced and be immediately adjourned until April 8.

Starwood shares jumped 2.3 percent to $84.02 in late-morning trade, and Marriott surged almost 4.0 percent to $71.36.

- Bidding battle -

Starwood initially had agreed in November to a tie-up with Marriott to create the world's largest hotel chain. Marriott has more than 4,400 properties worldwide, with a portfolio of brands including The Ritz-Carlton, JW Marriott and Gaylord Hotels. Starwood has 1,270 properties.

On March 18 Starwood announced it favored the Anbang-led group's $78.00 per share offer, or $13.2 billion, improved by $2 per share.

But a week ago it said it had accepted Marriott's improved bid of $21.00 per share in cash and 0.80 shares of Marriott, spurning Anbang.

Marriott reaffirmed Monday its commitment to the Starwood acquisition, saying it was "confident that the previously announced amended merger agreement is the best course for both companies."

Their agreed merger would combine Marriott's more than 4,400 properties worldwide, with a portfolio of brands including The Ritz-Carlton, JW Marriott and Gaylord Hotels, with Starwood's 1,270 properties in 100 countries and the Sheraton, Westin and W brands among others.

It would help Marriott expand in China, India and Europe, regions where Starwood has a strong presence.

Marriott expects the merger will yield $250 million in annual cost synergies within two years after closing, expected by mid-2016.

If Starwood backs out, it must pay Marriott a $450 million break-up fee.