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Marriott International to acquire Starwood Hotels & Resorts Worldwide

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Marriott International and Starwood Hotels & Resorts Worldwide have announced that the boards of directors of both companies have unanimously approved a definitive merger agreement under which the companies will create the world’s largest hotel company. The transaction combines Starwood’s leading lifestyle brands and international footprint with Marriott’s strong presence in the luxury and select-service tiers, as well as the convention and resort segment, creating a more comprehensive portfolio. The merged company will operate or franchise more than 5,500 hotels with 1.1 million rooms worldwide. Total consideration to be paid by Marriott totals US$ 12.2 billion consisting of US$ 11.9 billion of Marriott International stock, based on the 20-day VWAP (volume weighted average price) of Marriott stock ending on November 13, 2015, and US$ 340 million of cash, based on approximately 170 million fully diluted Starwood shares outstanding at September 30, 2015.

Arne Sorenson, president and CEO of Marriott International, said, “The driving force behind this transaction is growth. This is an opportunity to create value by combining the distribution and strengths of Marriott and Starwood, enhancing our competitiveness in a quickly evolving marketplace. This greater scale should offer a wider choice of brands to consumers, improve economics to owners and franchisees, increase unit growth and enhance long-term value to shareholders.”

Bruce Duncan, chairman of the Board of Directors of Starwood Hotels & Resorts Worldwide said, “During our comprehensive review of strategic and financial alternatives, it was clear that our talented people, world-class brands, global leadership and spirit of innovation were much admired and key drivers of our value. Our board concluded that a combination with Marriott provides the greatest long-term value for our shareholders and the strongest and most certain path forward for our company. Starwood shareholders will benefit from ownership in one of the world’s most respected companies, with vast growth potential further enhanced by cost synergies. Starwood’s shareholders will also receive the value of the previously announced sale of our vacation ownership business to Interval Leisure Group, which is not part of this transaction.”

One-time transaction costs for the merger are expected to total approximately US$ 100 to US$ 150 million. Transition costs are expected to be incurred over the next two years.

Marriott will assume Starwood’s recourse debt at the closing of the transaction. Sorenson will remain president and CEO of Marriott International following the merger and Marriott’s headquarters will remain in Bethesda, Maryland. Marriott’s Board of Directors following the closing will increase from 11 to 14 members with the expected addition of three members of the Starwood Board of Directors.

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