Chinese insurance firm Angbang tried to buy the Starwood hotel chain. They backed out of the deal, but that’s bad news.
FROM THE WASHINGTON POST | APRIL 1, 2016
China was poised to make its largest-ever investment in the United States this past week, after the Chinese insurance group Angbang topped Marriott in a bidding war for the Starwood hotel chain. The offer was extremely attractive: $14 billion in cash. But a chorus of skeptics urged Starwood to say no.
“Who are these guys?” Bloomberg News anchor Tom Keene asked. “It’s the Butch Cassidy analysis here. I have absolutely no clue what their balance sheet is. I have no clue how they’re going to finance this puppy. And more than anything: What’s their link to the Chinese government?”
Over at MarketWatch, columnist Tim Mullaney wrote: “Anbang’s CEO is no less than the son-in-law of deceased former Chinese leader Deng Xiaoping. While still an also-ran in China’s insurance market, it has easily arranged changes in that nation’s regulations to let it invest more in asset management and offshore real estate. They couldn’t get better service from Beijing if they invited the Communist Party’s central committee to the wedding.”
The deal also faced scrutiny from the powerful but obscure Committee on Foreign Investment in the United States (CFIUS), which is charged with assessing the national security implications of these sorts of transactions. Buying a hotel chain wouldn’t seem to present a particular threat. But Angbang’s purchase of New York’s Waldorf Astoria was reviewed in 2014. That deal ultimately got a green light, though the U.S. delegation to the United Nations moved its base of operations out of the hotel afterward.
Unfortunately, we’ll never know what regulators would have made of the Angbang-Starwood deal. On Thursday, the Chinese company announced that it was withdrawing its bid “due to various market considerations.” The intense pushback certainly didn’t help — and it’s part of a troubling trend.
Suspicion of Chinese motives is hardly new. After all, blaming China for America’s economic ills has been a theme of the past three presidential elections. But within the U.S. government and business community, there’s intensifying concern — ranging from wrong but reasonable to paranoid and hysterical — that China’s drive to invest in the United States is not benign.