Marriott to buy Starwood to create world’s biggest hotel chain
Marriott is paying $12.2 billion in stock ($11.9 billion) and cash ($300 million) for Starwood, or $72.08 per share. “I’m delighted to welcome Starwood to the Marriott family”, said J.W. Marriott, Jr., Chairman of Marriott worldwide in a statement.
Marriott operates such chains as Fairfield Inn & Suites and Ritz-Carlton while Starwood’s brands include St. Regis, W, Westin and Sheraton.
Starwood shareholders will own about 37 percent of the combined company.
In the meantime, Marriott’s CEO and president Arne Sorenson has moved in to reassure travellers.
The company, which had a market value of $US12.67 billion as of Friday, had reached out to InterContinental Hotels Group Plc, Wyndham Worldwide Corp and sovereign wealth funds for a possible deal since July, sources had told Reuters.
Hyatt was reportedly also in talks to purchase Starwood. “The merged company will offer broader choice for guests, greater opportunities for associates and should unlock additional value for Marriott and Starwood shareholders”.
But Starwood remained leery of the Pritzkers’ control and also felt that a combination with Marriott, which has more brands across more price points than Hyatt, would be more diversified, this person said.
Starwood derives almost two-thirds of its revenues from outside the USA, and hence, the proposed merger would offer Marriott an enlarged presence in markets outside the U.S.
Marriott (MAR) is acquiring Starwood (HOT) in a merger deal worth .2 billion.
Starwood hired Lazard to advise it in April.
Starwood shareholders will separately receive consideration from the spin-off of the Starwood timeshare business and subsequent merger with Interval Leisure Group, which has an estimated value of approximately USD1.3 billion to Starwood shareholders or approximately USD7.80 per Starwood share, based on the 20-day VWAP of Interval Leisure Group stock ending 13 November.
Jim Butler, head of global hospitality for corporate law firm Jeffer Mangels Butler & Mitchell, said the merger will make it harder for franchise investors to negotiate deals.
Marriott is buying Starwood, making it the largest hotel company in the world.
The companies are expecting this deal to close the middle of 2016 following the needed regulatory and shareholder approvals. Marriott’s board of directors will increase to 14, with the addition of three members from Starwood. It also said the deal would create $200 million in annual cost savings in the second full year after closing by leveraging back-office and operational efficiencies.