Marriott International Inc said it made a higher offer for Starwood Hotels and Resorts Worldwide Inc that was accepted by the owner of the Sheraton and Westin hotel brands.
The new stock-and-cash offer is worth $79.53 per share, or $13.6 billion, and tops an all-cash $78 per share, or $13.16 billion, offer from a group led by China's Anbang Insurance Group Co.
The Marriott-Starwood deal will create the world's largest hotel chain with top brands including Sheraton, Ritz Carlton and the Autograph Collection. Marriott in November offered $12.2 billion, or $72.08 per share, for Starwood.
Starwood shareholders will receive $21.00 in cash and 0.80 shares of Marriott Class A common stock for each share of Starwood common stock, Marriott said.
Starwood shares were trading at $82.72 before the opening bell. Marriott was slightly down at $72.00.
Under the revised agreement, Starwood will pay a breakup fee of $450 million, up from $400 million previously.
Starwood Chairman Bruce Duncan said the company was pleased that Marriott has "recognized the value" that Starwood brings to this merger.
At Thursday's close, Marriott's bid for Starwood was worth $68.06 per share, or around $11.5 billion overall.
Anbang has emerged from near obscurity 18 months ago to sign deals worth more than $30 billion, moving into the big league of global real estate and finance.
The Beijing-based firm also agreed this month to pay Blackstone Group $6.5 billion for Strategic Hotels & Resorts Inc, which owns the Four Seasons Washington D.C.
Established in 2004 as an automotive and property insurer, Anbang is looking to use its 1.65 trillion yuan ($253 billion) in assets to transform into a worldwide investor.
In October 2014, Anbang agreed to pay $1.95 billion for the Waldorf Astoria Hotel in New York.
