At least three big Chinese companies are competing to win Beijing’s approval to bid forStarwood Hotels & Resorts Worldwide Inc., according to people with knowledge of the discussions, setting the stage for what could be the largest-ever Chinese takeover of a U. S. company.
Lodging giant Shanghai Jin Jiang International Hotels (Group) Co., along with HNA Group, parent of Hainan Airlines Co. and sovereign-wealth fund China Investment Corp., each has presented a separate proposal to the Chinese government over the past two months, these people said.
Given the potential size of the deal, the Chinese government wants only one domestic company to make a bid, the people said, so that Chinese companies don’t drive up the price by bidding against one another. Beijing is expected in the next few weeks to make its selection.
Starwood has been running a strategic review process for months and listening to merger bids from companies around the globe, said people familiar with the process. A Starwood spokeswoman declined to comment.
The Stamford, Conn., hotel operator controls brands like Westin, W Hotels and St. Regis and has more than 1,200 properties world-wide. In April, Starwood’s board indicated it would be open to a sale amid concerns it wasn’t growing as fast as rival hotel operators.
It isn’t clear how much the Chinese companies might be willing to pay for Starwood, but people familiar with the discussions said any bid would come at a premium to Starwood’s market value, which was nearly $12 billion at the start of Tuesday.
This post was published at David Stockmans Contra Corner on October 28, 2015.
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