Mirae Properly Canceled $5.8 Billion Hotel Deal, Judge Says

(Bloomberg) — Mirae Global Asset Investment Co. properly canceled its purchase of 15 U.S. luxury hotels from Dajia Insurance Company, a judge concluded in one of the largest deals this year affected by the fallout from the Covid-19 pandemic.



a person holding a sign: Employees of Mirae Asset Investment Management Co. walk past the company's logo in Seoul, South Korea, on Monday, Feb. 18, 2008. Mirae Asset Investments Co., South Korea's biggest fund manager, is taking advantage of the cheapest prices since 2006 to move cash into shares of companies that will benefit from a weaker won and closer ties to China.


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Employees of Mirae Asset Investment Management Co. walk past the company’s logo in Seoul, South Korea, on Monday, Feb. 18, 2008. Mirae Asset Investments Co., South Korea’s biggest fund manager, is taking advantage of the cheapest prices since 2006 to move cash into shares of companies that will benefit from a weaker won and closer ties to China.

China-based Dajia didn’t meet all the conditions for closing the sale of the hotels, which included iconic properties such as the Westin St. Francis in San Francisco and the Loews Santa Monica Beach Hotel, Delaware Chancery Court Judge Travis Laster ruled Monday.

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Dajia, which assumed the assets of struggling Chinese insurer Anbang Insurance Group Co., failed to operate the hotels in an “ordinary manner,” as required by the terms of the deal, while struggling to cope with the U.S.’s coronavirus outbreak, Laster ruled.

The ruling may have consequences for other busted-deal cases tied to business shutdowns and changes caused by the virus’s worldwide reach. The value of many transactions were affected by the drop in travel and other factors due to the pandemic.

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The judge also said Dajia was responsible for returning Mirae Global’s deposit and covering the South Korean firm’s legal expenses — costs that could run in the tens of millions of dollars.

Laster’s finding that Mirae Global “was justified in terminating the Anbang transaction” was a just outcome, Michael Carlinsky, one of the company’s lawyers, said in an emailed statement. Representatives of China-based Dajia didn’t have an immediate comment on the ruling.

The buyout was among almost a dozen transactions that have fallen apart this year as valuations cratered on government-enacted lock downs. At one point, a half-dozen such cases were before Delaware judges.

Some, including a fight between Tiffany & Co. and French clothier LVMH, settled. Tiffany sued to force LVHM to consummate a $16 billion buyout that the French company said was fatally impacted by the virus. The jeweler agreed to sell itself at a slightly reduced price.

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The hotel-deal case is AB Stable VIII LLC v. MAPS Hotel and Resorts One LLC, No. 2020-0310, Delaware Chancery Court (Wilmington).

(Updates with Mirae Global comment in sixth paragraph)

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