Starwood Hotels & Resorts Inc, the operator of Sheraton and Westin hotels, said on Friday that it accepted an increased buyout offer from a group led by China's Anbang Insurance Group and would scrap its deal with Marriott International Inc.

The Anbang-led group, which includes private equity firms J.C. Flowers & Co and Primavera Capital Ltd, raised its cash offer for Starwood to $78 per share from $76, Starwood said. Anbang's new offer raises the value of Starwood to $13.16 billion from $12.82 billion, based on shares outstanding as of Feb 19. Marriott had offered $12.2 billion for Starwood.

According to a Starwood statement, "Marriott has the right until 11:59 p.m. ET on March 28, 2016, to negotiate revisions to the existing merger agreement." If Starwood does not accept a new offer from Marriott, it would pay the company a $400 million break up fee.

Marriott also issued a statement in which it said 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. The company is considering postponing its Special Meeting of Stockholders which is currently scheduled for March 28, 2016."

Starwood shareholders will also receive stock in Interval Leisure Group (ILG), which is buying Starwood's vacation ownership business for about $5.67 per Starwood share.