Anbang backs out of Starwood chase to leave door open for Marriott

China's Anbang has backed out of the takeover battle for Starwood Hotels & Resorts, according to reports, leaving the door open for Marriott International.

A capitulation by a consortium led by the Chinese insurer comes only days after it seemed to be in pole position to win the race to acquire the US hotel group, having on Tuesday lifted its offer for the company to $14bn, trumping Marriott International’s $13.6bn.

Starwood now plans to revert to Marriott's most recent offer, according to sources cited by multiple news outlets on Thursday, which valued the company at $13.6bn.

Starwood had admitted it was in discussions with Anbang after the Chinese group's consortium, which includes JC Flowers & Co and Primavera Capital, lifted its offer to $82.75 per share from $78 per share.

But Anbang never followed through with its offer at the weekend to Starwood to make its offer binding, Reuters reported, citing sources familiar with the matter.

On Monday, Starwood said that its board felt the Anbang-led offer was "reasonably likely" to lead to a "superior proposal" to the proposed Marriott deal.

“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,” the company said.

Starwood, which owns the Sheraton and Westin brands, said it has not changed its recommendation in support of the merger with Marriott.

Meanwhile, Marriott responded to news of Anbang’s sweetened offer by reaffirming its commitment to acquire Starwood and saying it was confident the previously announced merger agreement was the best course for both companies.

“The combined company will offer stockholders significant equity upside and greater long-term value driven by a larger global footprint, wider choice of brands for consumers, substantial revenue synergies, and improved economics to owners and franchisees leading to accelerated global growth and continued strong returns,” Marriott said.

Nomura said Marriott remains the better long-term partner for Starwood due the possible cost and revenue synergies gained by joining the businesses.