US-based Marriott International Inc announced on Monday that it is to acquire Starwood Hotels & Resorts Worldwide Inc in a US$12.2 billion deal that would create the world’s largest hotel company.
The agreed merger unites Marriott brands, which include Ritz-Carlton, Renaissance and JW Marriott, and Starwood marks like Westin, W and Sheraton into a giant that operates 5,500 hotels spanning about 100 countries.
The acquisition would further Marriott’s goal of boosting its presence in key emerging markets China and India, where Starwood is well-represented, as well as in Europe, executives said.
Photo: AFP
“The driving force behind this transaction is growth,” Marriott chief executive Arne Sorenson said.
“To be successful in today’s marketplace, a wide distribution of brands and hotels across price points is critical,” said Adam Aron, acting chief executive at Starwood.
Both companies are also big players in North America.
The two companies had combined revenues of nearly US$19 billion last year and currently have about 1.1 million rooms worldwide.
The combined company is to dwarf No. 2 global hotelier Hilton Hotels and Resorts, which has 4,500 hotels and 735,000 rooms.
Starwood’s future has been a subject of speculation since Frits van Paasschen unexpectedly resigned as chief executive in February following a disagreement with company board members over strategy.
Starwood in April announced it had hired investment bank Lazard to consider strategic options, including a possible sale of the company. Companies earlier discussed as possible buyers included InterContinental Hotels Group, the Chinese company Jin Jiang International Holdings Co (錦江國際酒店集團) and Hyatt Hotels.
Marriott said the deal would allow it to notch US$200 million in annual cost savings in the second full year after closing.
Starwood is expected to continue a program to sell company-owned hotels to franchisees, raising US$1.5 to US$2.0 billion over the next two years.
Analysts said that Marriott could opt to divest itself of Starwood’s underperforming Sheraton chain, but might also choose to invest in turning it around.
Starwood shareholders are to receive 0.92 shares of Marriott International, Class A common stock and US$2.00 in cash for each share of Starwood common stock, a joint statement from the companies read.
Starwood shareholders are to separately receive about US$7.80 per share from a transaction set to close prior to the Marriott-Starwood merger closing — the spin-off of the Starwood timeshare business and its merger with Interval Leisure Group, which has an estimated value of approximately US$1.3 billion
Marriott chief executive Sorenson is to lead the combined company, which is to be based at Marriott headquarters in Bethesda in the US state of Maryland.
The transaction is expected to close in the middle of next year.
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