Marriott to create global hotels giant with €11.4bn deal
Marriott International is to buy Starwood Hotels & Resorts Worldwide for $12.2bn (€11.4bn) to create the world's largest hotel chain with top brands including Sheraton, Ritz Carlton and the Autograph Collection.
The combined company will own or franchise more than 5,500 hotels with 1.1 million rooms worldwide and give Marriott greater presence in markets such as Europe, Latin America and Asia including India and China.
Marriott currently has three-quarters of its rooms in the United States.
Starwood, which also owns St Regis and Aloft hotel brands, gets nearly two-thirds of its revenue from outside the country.
Starwood shares fell 5.2pc to $71.07 in premarket trading yesterday, below the offer price of $72.08, indicating investors were unhappy with the offer being at a 4pc discount to the stock's Friday close. Marriott shares fell 1.3pc to $71.65.
"We have been in the business for a long time but Starwood is more global than Marriott is," Marriott chief executive Arne Sorenson, who will lead the combined company, told CNBC. "It's a good thing that we will have more sources (of growth) from around the world."
Starwood had essentially put itself up for sale in April, when it said it was considering strategic alternatives, taking about 14pc off its stock up to Friday's close.
The company, which had a market value of $12.67bn as of Friday, had reached out to InterContinental Hotels Group, Wyndham Worldwide Corp and sovereign wealth funds for a possible deal since July, sources had told Reuters.
Starwood's shareholders will get 0.92 Marriott Class A share and $2 in cash for each share held. They will also get about $7.80 per share from the spinoff of Starwood's timeshare business and subsequent merger with Interval Leisure Group Inc, announced in February.
Marriott said it expected one-time transaction cost of $100m-$150m related to the acquisition.
After the transaction closes, the company is expected to add three Starwood members to its board, which will expand to 14 members. The deal is expected to close in mid-2016.
Lazard and Citigroup advised Starwood on the deal and Deutsche Bank Securities advised Marriott.