Anbang Insurance Group completed most of its $6.5 billion acquisition of Strategic Hotels & Resorts, helping to bolster the Chinese company’s credibility as a global buyer after its abrupt withdrawal from the bidding war for Starwood Hotels & Resorts Worldwide earlier this year.
The insurer bought 15 of Strategic’s 16 properties, according to people with knowledge of the deal. It’s the second-largest U.S. acquisition by a Chinese buyer, after the $7 billion sale of Smithfield Foods Inc. to Shuanghui International Holdings Ltd. -- now known as WH Group Ltd. -- in 2013, according to data compiled by Bloomberg and New York-based research firm Rhodium Group. Beijing-based Anbang bought Strategic from Blackstone Group LP, which had taken the company private last December for about $6 billion.
“It’s only a positive” for Anbang, David Loeb, senior lodging analyst at Robert W. Baird & Co., said in an interview before the closing. “It helps restore their credibility, which is important for them in their own market, particularly as they look at a public offering. That’s going to require investor confidence in the group.”
The inter-agency Committee on Foreign Investment in the United States is still reviewing the purchase of the Hotel del Coronado near San Diego, said the people, who asked not to be identified because the process is private. The hotel is located close to a large naval base. The committee reviews acquisitions of U.S. businesses by foreign investors for national security risks.
Representatives for Anbang and Blackstone declined to comment. Whitney Smith, a spokeswoman for the Treasury Department, which leads the committee, also declined to comment. The committee’s reviews are confidential.
Arne Sorenson, chief executive officer of Marriott International Inc., which manages some of the Strategic properties, said on Friday during a Bloomberg Television interview that Anbang had closed its purchase of Strategic. Marriott didn’t immediately respond to requests for comment Monday.
Anbang, with assets of more than 800 billion yuan ($120 billion), has been on a two-year shopping spree for investments outside China, buying New York’s Waldorf Astoria hotel, a Belgian bank, a Dutch insurer and office buildings in New York and Canada. Within days of reaching a deal to buy Strategic in early March, Anbang and two partners launched a surprise $12.9 billion offer for Starwood Hotels, which already had agreed to be taken over by Marriott.
After forcing Marriott to increase its bid, then escalating its own offer to $14 billion, Anbang suddenly bowed out on March 31, citing only “various market considerations.” Marriott ended up buying Starwood in a deal that was completed last week.
Anbang, led by Chairman Wu Xiaohui, entered the U.S. market with its February 2015 purchase of the Waldorf Astoria (pictureD) for $1.95 billion, the most ever paid for an American hotel. The company plans to convert most of the roughly 1,400 hotel rooms into high-end condominiums starting next year, according to a person with knowledge of the plans.
Strategic’s properties include the JW Marriott Essex House in New York and the Four Seasons in Washington. The oceanside Hotel del Coronado was the setting for the 1959 film “Some Like It Hot,” which starred Marilyn Monroe, Tony Curtis and Jack Lemmon.
News by Bloomberg, edited by hospitality Ireland