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Mirae Asset scraps $5.8 billion deal to buy U.S. hotels from Anbang

Mirae Asset scraps $5.8 billion deal to buy U.S. hotels from Anbang

Posted May. 05, 2020 07:44,   

Updated May. 05, 2020 07:44


South Korea’s Mirae Asset Global Investments said on Monday that it has terminated a 5.8 billion dollar deal to buy 15 high-end hotels in the United States from China’s Anbang Insurance Group. The South Korean asset management company accused Anbang of failing to remedy breaches of its obligations. Experts say that the move reflects the uncertain prospect of global tourism business, the hardest hit industry by the COVID-19 shock.

On Monday, Mirae Asset announced that it issued a notice to terminate the contract with Anbang Insurance that was signed in September last year. “Anbang had failed to timely disclose and discharge various material encumbrances and liabilities impairing the Hotels and failed to continue the operation of the Hotels in accordance with contractual requirements,” Mirae Asset said, emphasizing that it was Anbang’s breaches that caused the contract termination.

The list of hotels that Mirae Asset signed to buy last year includes JW Marriott Essex House New York, the Ritz-Carlton Half Moon Bay Resort near San Francisco, and InterContinental hotels in Chicago and Miami. The deal had been scheduled to be finished by April 17, but the inking was delayed owing to the differences in opinion between Mirae Asset and Anbang.

In mid-April, Anbang filed a lawsuit against Mirae Asset Global Investments to finalize the deal. In response, the South Korean firm claimed it had the rights to terminate the contract as Anbang breached contract obligations, and Mirae Asset demanded that Anbang should resolve the contractual issues by May 2.

“We’re ready to take legal actions now that Anbang has filed a lawsuit against us,” said Mirae Asset, invoking its right for the return of its deposit worth about 700 billion won. “We have not violated any obligation. The contract is not terminated, and therefore, the deposit cannot be returned.”

Some say Mirae Asset could benefit from the termination of the contract. In fact, the operation of hotels across the world has not returned to normal owing to the lockdown orders from governments to contain the covid-19, and the prospect for short-term recovery also remains uncertain. “The deal would have spelled the winner’s curse on Mirae Asset,” said a high-ranking official at a local brokerage. “The move was designed to escape the deal.”

Gun-Huk Lee gun@donga.com