Chinese insurer Anbang is walking away from its latest bid to purchase Starwood Hotels (HOT), according to a report from the Wall Street Journal.
Anbang's move out of the running for the hotel clears the way for Marriott (MAR) to finally complete the purchase of Starwood. Marriott and Starwood originally agreed to a $12.2 billion merger in November before Anbang stepped in with an unsolicited offer for the hotel chain.
Marriott then came with a revised offer that totaled about $13.6 billion. Earlier this week, Anbang trumped that offer again, offering $82.75 per share in cash, or $14 billion based on outstanding shares.
Starwood would have been the third major hotel purchase Anbang had made recently. The company successfully purchased Strategic Hotels & Resorts from Blackstone (BX) for $6.5 billion earlier this month and bought the iconic Waldorf Astoria in New York for $1.95 billion last year.
Starwood shares were dropping more than 4% after-hours Thursday on the news, while Marriott shares were also down nearly 5%.
Anbang withdrawing its latest offer is curious, as the Wall Street buzz this week has been that Marriott was too disciplined to raise its bid for Starwood again. Robert Baird analyst David Loeb told CNBC Tuesday that, "I just think Marriott is too disciplined to pay more than what they've already offered. If I was a Starwood shareholder, I would be asking for the maximum value and I would be asking for the maximum value now."
Anbang's offer was so enticing in the short-term because it was an all-cash bid. However, most analysts' agreed that Marriott offered the best long-term returns for the company.
Anbang's purchase would have represented the largest purchase of a U.S. company by China ever. But now the ball is now back in Marriott's court, and only time will tell whether the company's investors are still keen on a tie-up with Starwood.