In a statement released by Starwood, the deal – led by Anbang Insurance Group – values the company at $13bn (£9.2bn) and was called a ‘superior proposal’ to that of Marriott’s $12.2bn (£8bn) takeover bid last year.
Starwood said it has notified Marriott and intends to terminate the Marriott merger agreement and enter into a definitive agreement with the consortium.
Marriott has the right until 28 March to revise its existing offer – which would create the world’s largest hotel company, with more than 5,500 hotels and 1.1 million rooms across the globe.
The statement read: “Starwood will negotiate in good faith with Marriott during this period, and the Starwood board will consider in good faith any changes to the Marriott agreement that Marriott may propose during this period.”
In response to the announcement, Marriott suggested it would consider a new offer: “Marriott continues to believe that a combination of Marriott and Starwood is the best course for both companies and offers the best value to Starwood shareholders.
“Marriott is in the process of reviewing the Anbang consortium’s proposal and is carefully considering its alternatives.”
If Starwood accepts the Anbang investor group offer, it will be required to pay a $400m (£276m) termination fee to Marriott.