Did China's capital flight fears doom Anbang's Starwood bid?

HONG KONG - In a year of surging Chinese outbound investment, Anbang Insurance Group's decision to withdraw its US$14 billion (S$18.9 billion) bid for Starwood Hotels & Resorts Worldwide has left market watchers scratching their heads.

Had the deal materialised, it would have been the largest takeover of a US company by a Chinese buyer. It also would have brought China's foreign investment tally for 2016 to US$106 billion, almost matching the roughly US$107 billion logged for all of last year. Data from Dealogic shows that Chinese investors clinched 183 overseas deals worth US$92 billion in the first quarter, almost triple the sum for the same period of last year.

Anbang announced the retreat late on Thursday, citing "various market considerations."

The surprise move followed a tussle with US rival Marriot International. Marriot and Starwood came to a $12 billion agreement in November, but the private Chinese insurer swooped in three weeks ago, bidding in a consortium with US private equity firm J.C. Flowers & Co. and China's Primavera Capital. The trio was keen to acquire Starwood's premium hospitality portfolio, which includes brands such as W Hotels, Sheraton, Westin and Le Meridien.

After prompting Marriott to sweeten its offer to $13.6 billion, Anbang upped the ante to $14 billion - $82.75 per share - over the Easter holiday. Now it has simply walked away.

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