October 27, 2015 / 6:15 PM / 3 years ago

Three Chinese suitors show interest in Starwood Hotels: source

(Reuters) - China’s sovereign wealth fund and two big Chinese companies have expressed interest in Starwood Hotels & Resorts Worldwide Inc HOT.N, joining other potential suitors from around the world, a source familiar with the matter said on Tuesday.

Starwood Hotels, the owner of St. Regis and Sheraton hotel brands, has indicated it is considering a sale, and its highly prized collection of properties has also garnered interest from wealthy Middle Eastern investors and other global firms, the person said.

Lodging giant Shanghai Jin Jiang International Hotels Group Co (2006.HK), Hainan Airlines Co’s (600221.SS) parent HNA Group as well as sovereign wealth fund China Investment Corp have expressed interest in Starwood, according to the source, who was not authorized to speak on the record.

The three Chinese entities have submitted proposals to the Chinese government over the past two months to allow them to compete to buy Starwood, the WSJ reported, citing sources.

Beijing is expected to select a single bidder in the next few weeks, the Journal said. China’s government only wants one bidder so as not to drive up the price by bidding against one another, the paper said.

Starwood shares rose as much as 12.5 percent to $77.10 on Tuesday, giving the company a market value of about $13 billion.

Starwood said it did not comment on market rumors or speculation.

Shanghai Jin Jiang International Hotels Group, HNA Group and China Investment Corp did not respond to requests for comment.

If a Chinese company does emerge as the ultimate buyer for Starwood, it could be controversial. In the past, Chinese companies have bought other hotel properties, most notably the Anbang Insurance Group’s purchase of New York’s Waldorf Astoria in 2014 without objection from the U.S. government.

The government is unlikely to step in and stop this proposed transaction, although it may shift sensitive meetings out of Starwood properties or ask for particular hotels to be sold if they are near sensitive military institutions, said Paul Marquardt, a Cleary Gottlieb lawyer who is an expert on foreign investment in the United States.

Starwood had reached out to potential bidders including InterContinental Hotels Group Plc (IHG.L), Wyndham Worldwide Corp WYN.N and sovereign wealth funds in July, three months after it decided to explore a sale.

InterContinental had said then that it was “not in talks with Starwood with a view to a combination of the businesses,” while Wyndham had declined to comment.

Reporting by Mike Stone in New York and Ankit Ajmera in Bengaluru, Editing by Kirti Pandey and Ken Wills

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