Deals and IPOs

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As global concerns mount about the strength of the Chinese economy and domestic capital flees the country, China's Anbang Insurance Group is making a major push for U.S. assets.

On Friday, Starwood Hotels announced that a consortium led by Anbang had made a revised bid for the company at $78 per share in cash, or about $13.2 billion in total. Starwood's board had determined that proposal was "superior" to its pending merger agreement with Marriott. When it was announced last year, the merger between the two American companies was worth $12.2 billion.

Anbang's aggressive expansion into the U.S. hospitality industry may be related to the ongoing wave of capital flight out of China and into North American real estate, but it's also tied to the company's long-term business goals, people familiar with the matter told CNBC.

News broke Monday the Anbang-led consortium had made an unsolicited bid for Starwood, and CNBC confirmed last week that the same Chinese company had agreed to buy Strategic Hotels & Resorts from Blackstone for $6.5 billion.

The Beijing-based company also concluded a deal last year to acquire New York's Waldorf Astoria for $1.95 billion. American hotels, especially Starwood, are an appealing asset for Anbang because they can offer long-term cash flow and have strong brand recognition, the people said.

A Chinese security guard walks past the front desk at a branch of Anbang Insurance in Shanghai last December.
Imaginechina | AP

Stockholders in Starwood and Marriott had been expected to vote on the companies' integration on March 28, so there was a "limited window" for the Anbang-led bid, one source said. For its part, Marriott has said it is considering postponing its upcoming meeting as it weighs possible counter bids.

Reportedly set up in 2004 with only $60 million and a focus on car insurance, Anbang now has total assets of about $253 billion. Its U.S. spokesman declined to comment for this story.

In a 2015 recruiting event through Harvard, Anbang Chairman Wu Xiaohui offered more insight into his company's interest in Western real estate. Arguing that the cost of lifetime ownership in the Waldorf Astoria is "very cheap in my eyes" compared to similar opportunities in the center of Beijing, Wu also contended that the investment will be a good play on the increasingly affluent Chinese tourist.

"Recently, news regarding our Waldorf purchase flooded the Internet in China, which brought us extra brand recognition and business opportunities. This is what I call the spillover benefits," Wu said, according to a transcript provided by the company. "A previously little-known hotel to local Chinese people, Waldorf Astoria has became more recognizable and famous in China after it was purchased by Anbang. Therefore there are mutual benefits for both China and America."

Wu also hinted in that 2015 discussion that his team was aggressively seeking further international expansion.

"The total number of airline miles travel by this team is equal to a round trip between the Earth and the moon, which is a testament of our investment decision process," Wu said. "We must win the first battle and every battle thereafter as we are representing Chinese enterprises going global."

Chinese outbound mergers and acquisitions investments continue to expand rapidly. In fact, 2016 year-to-date numbers have roughly matched 2015's total deal value, according to data provided to CNBC by Dealogic.

Anbang's own prior statements suggest that it has long expected to diversify into Europe and North American markets in particular.

"Given the strong performance in the past, the group intends to realize long-term stable investment return by investing in high-quality real properties in North America," the company said in a statement celebrating its Waldorf Astoria acquisition. "Going forward it will increase the share of overseas assets in asset allocation, taking Europe and North America as priority areas"

Spencer Levy, Americas head of research at CBRE, told CNBC's "Power Lunch" on Monday that Chinese direct investment into the U.S. has been "growing rapidly," and includes financial firms, developers, other corporations and high net worth individuals.

Two strategies abound for Chinese companies investing in the U.S., he said: One set of investors is simply "looking for long-term, stable yield" on capital, while another is hoping to apply development expertise to a market that isn't "past-peak."

The Chinese economy has slowed of late, notching 6.9 percent GDP growth in 2015 for a 25-year low. In fact, growth may actually be worse, as many experts put the most recently reported quarter below 4 percent.

As growth slows, and the yuan weakens against the dollar, investors are looking for stable investments, and that has led them to the U.S., Chinese economics experts say.

"Money increasingly wants to diversify out of China," Victor Shih, a professor at the University of California, San Diego, who specializes in China's finances, told CNBC recently. "These are domestic investors who had invested in China because that's where they got the highest return, but that's been driving the capital flight."