One of the world’s largest hospitality companies, Starwood Hotels & Resorts Worldwide, might soon be the object of the largest-ever takeover of a U.S. company by a Chinese firm.The Chinese government is in discussion with three companies – Shanghai Jin Jiang International Hotels; HNA, parent of Hainan Airlines; and China Investment Corp., a sovereign wealth fund – one of which will bid on the massive hotel chain.
The government plans to choose just one company to avoid a possible bidding war for Starwood, which owns over 1,200 properties worldwide and manages brands such Westin, W Hotels and St. Regis, unnamed sources told the Wall Street Journal.
It’s not yet clear what the bidders are willing to pay, but the amount is likely to exceed Starwood’s start-of-Tuesday valuation of $12 billion, the Journal reported.
The hotel firm’s stock price jumped 9.1 percent Tuesday to 74.81 on the news, its highest level since 2009. Starwood in April said it was exploring various options that included a sale or merger, largely as a reaction to having lagged behind competitors like Hilton and Marriott. Its longtime CEO, Frits van Paasschen, resigned in February and Starwood has been selling off hotel properties this year.
A potential deal would be the latest in a string of major hotel pickups by Chinese firms. Last year, the insurance giant Anbang bought the Waldorf-Astoria at 301 Park Avenue in New York’s Midtown for nearly $2 billion. And in February, Sunshine Insurance Group, bought the Baccarat Hotel at 20 West 53rd Street, then a Starwood property, paying $230 million.
“Chinese investors have been pretty aggressive in the hotel market over the last year or so,” said Lukas Hartwich, an analyst at Green Street Advisors LLC, told Bloomberg. “Starwood has some pretty powerful brands. It’s an attractive platform, especially if you don’t already own a platform with that kind of cachet.”
All three firms involved in a possible bid for Starwood are state-controlled or partly owned by the Chinese government.
China’s Central Bank is moving forward with capital markets reforms that could make it easier for Chinese citizens to invest in South Florida real estate.
The country’s monetary policymakers announced on Friday they may soon allow residents of a Shanghai free-trade zone to buy overseas assets directly – a trial run for the rest of China and part of a broader effort to loosen capital controls.
The move would also open up Yuan-denominated bonds to foreign companies. Chinese citizens currently face tight limits on the amount of money they can invest abroad. Those looking to convert funds from Yuan into Dollars to buy, say, an apartment in Brickell, often have to do so through companies or by smuggling cash to Hong Kong.
The announcement comes despite an uptick in capital outflows from China in recent months, which would normally provide an incentive to tighten capital controls.
In September alone, investors pulled $194 billion from the country, according to Bloomberg. “A lot of people suggested that if the economy slows, if there’s more volatility, the Chinese will drop the reforms,” Andy Rothman, an investment strategist at fund manager Matthews Asia, told Bloomberg.
“I don’t think that’s the way the Chinese government views it. They are not worried about the scale of the outflows.” ISG World, an Aventura-based brokerage, recently partnered with one of China’s top real estate firms that has more than 60,000 agents spread throughout 17 cities.
It’s the latest move in Miami’s real estate market, where eyes have turned to Asia now that a strengthening U.S. dollar has sapped the energy of South American investors.
China’s Central Bank is moving forward with capital markets reforms that could make it easier for Chinese citizens to invest in South Floridareal estate.