Three Chinese firms are reportedly vying for a chance to bid on Starwood Hotels, which operates the W and Sheraton hotels, in what could be the biggest-ever Chinese takeover of a U.S. company.
Hotel giant Shanghai Jin Jiang international Hotels, Hainan Airlines's parent company HNA Group and sovereign wealth fund China Investment Corp. are all interested in bidding for Starwood, according to media reports.
The firms have submitted proposals to the Chinese government seeking permission to make a formal bid, The Wall Street Journal reported, citing sources. China will then authorize just one company to make an offer, a scheme designed to avoid a bidding war among domestic firms.
Starwood shares popped 9% Tuesday on the news, pushing its market value to $12.6 billion. If a sale is completed near that price, it would be the largest Chinese takeover of a U.S. firm, well ahead of the $7 billion Shuanghui spent for pork producer Smithfield Foods in 2013, according to Dealogic.
Chinese companies are now investing in the U.S. at a record pace, with completed deals totaling $15 billion so far this year. Many Chinese firms are looking to tap into the global tourism and entertainment sectors.
In 2014, the iconic Waldorf Astoria hotel in New York was sold to a Chinese insurance company for $1.95 billion. Wang Jianlin, a property mogul who already owns plenty of hotels and shopping plazas, bought movie chain AMC Cinemas in 2012.
The future of Starwood, which also owns the St. Regis and Westin brands, has hung in the balance ever since CEO Frits van Paasschen resigned in February amid growth worries.
In April, the U.S. hotel chain said it planned "to explore a full range of strategic and financial alternatives," and retained financial advisory firm Lazard to assist, according to a statement.
The three Chinese companies did not immediately respond to requests for comment.
Top six China M&A deals into the U.S.:
- Smithfield Foods - $7 billion (2013)
- Morgan Stanley (10%) - $5.6 billion (2007)
- Western Digital (15%) - $3.8 billion (2015)
- Motorola Mobility Holdings - $3.1 billion (2014)
- Blackstone Group (10%) - $3 billion (2007)
- AMC Entertainment - $2.6 billion (2012)
