Chinese insurance group Anbang has deiced to drop the plans to takeover US hotel china Starwood Hotels days after proposing an improved $14 billion offer.
The Chinese company, which has lapped up high value assets in the US, said it was bowing out on "market considerations."
"Due to various market considerations, the consortium has determined not to proceed further. We thank the Starwood board, management team and its advisors for their efforts and support throughout this process," Anbang said in a statement.
Anbang said Starwood's high-quality, leading global hotel brands had attracted its interest and that the US chain had met many of its acquisition criteria, including the ability to generate consistent, long-term returns over time.
The bidding war for Starwood heated up earlier this week when a consortium led by Anbang Insurance gave a non-binding all-cash offer that valued Starwood at $14 billion, pitting it against Marriott International in the quest for the US hotel chain.
The consortium, which includes private equity firms J.C. Flowers & Co and Primavera Capital Ltd, offered $82.75 per share, topping the offer of $78 per share made by Marriott on March 21.
Starwood had said the Anbang offer was "reasonably likely" to lead to a superior proposal.
However, Anbang did not follow up with its offer and make it binding, Reuters reported. Anbang did not give Starwood a reason for walking away from the deal.
Shares in Starwood and Marriott fell about 4 percent in after hours trading as the Chinese suitor walked away, making a Marriott acquisition of Starwood a more likely outcome.
A Starwood-Marriott merger would create the world's largest lodging company with about 5,700 hotels.
Relatively small Chinese insurer
Anbang is on a shopping spree in the US, armed with a $254 billion war chest. The Insurance giant said earlier this month it was acquiring another top dollar hotel property in the United States -- Strategic Hotels & Resorts -- for $6.5 billion.
Anbang had completed in 2015 the purchase of New York's storied Waldorf Astoria hotel from Hilton Worldwide Holdings for $1.95 billion.
Privately held Anbang had bought last year US annuities and life insurer Fidelity & Guaranty Life for $1.57 billion.
Anbang, a relatively small Chinese insurance company, punched above its weight to purchase iconic Waldorf Astoria, raising eyebrows in the US. The company was founded in 2004 with capital of $60 million. Its chairman, Wu Xiaohui, is married to the grand-daughter of Deng Xiaoping, the Economist reported.