South Korea’s Mirae Asset Global Investments said on Monday that it has terminated a $5.8 billion deal to buy 15 U.S. hotels from China’s Anbang Insurance Group [ANBANG.UL], accusing the insurer of breaching contract obligations.
The move comes at a time when the coronavirus pandemic has put a series of deals at risk, as valuations have been severely impacted in a blow to funding prospects.
The tourism industry has been one of the hardest hit by the pandemic, as governments globally restrict travel, leading to sharp declines in bookings.
A consortium led by Mirae agreed last year to buy the hotels in U.S. cities, including in New York, San Francisco and Los Angeles, from Anbang, which had been selling some of its overseas assets after the Chinese government took control of the troubled insurer in 2018.
But the asset manager said in a statement that Anbang did not remedy breaches of certain obligations regarding the September contract, resulting in the termination of the deal.
“Among other things, 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.
Mirae Asset has also invoked its rights for the return of its deposit relating to the failed transaction.
A person close to Dajia, a new company formed to take over assets from Anbang, said that the contract termination itself is a violation of the deal and that Anbang did not breach any contract obligations.
Dajia Insurance Group had last week asked a U.S. court to bar Mirae from terminating the contract.
In its statement, Mirae Asset said that Anbang had filed litigation against it and affiliated entities in the United States last week, but did not give any further details.
“Mirae Asset will protect its rights vigorously in accordance with the terms of the agreement,” it said.