Yesterday, Monday, hotel chain Marriott International (MAR - Analyst Report) said that it had agreed to buy fellow hotelier Starwood Hotels and Resorts Worldwide (HOT - Analyst Report) in a cash and stock deal worth $12.2 billion. This acquisition has turned Marriott into the world’s largest hotel company.
According to the terms of the deal, Marriott will shell out $72.08 per share in cash and stock for Starwood; Starwood shareholders will now own 37% of the newly combined company. Marriott owns a total of 19 brands, which include The Ritz-Carlton, Courtyard, and Residence Inn, while Starwood has 11 brands that include W hotels, Aloft, Westin, and St. Regis.
Arne Sorenson, Marriott’s president and chief executive, said in a news release that “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.”
The combined company would have more than 5,500 hotels, both owned and franchised, in its portfolio, along with 1.1 million rooms worldwide; the company would also have posted over $2.7 billion in fee revenue for the 12 months ended this past September 30.
Mr. Sorenson will remain in his role as president and chief executive of Marriott after the deal closes. Headquarters will stay in Bethesda, Maryland, and the company’s board of directors will increase to 14 due to an additional three members from Starwood.
Now together, Marriott and Starwood will have a presence in over 100 countries. The companies said the deal will not only initiate an increase in global growth by using Marriott’s extensive relationships, but it will also help the combined company improve in areas like reservations and procurement, profitability, and franchise attractiveness.
The companies said that the deal terms announced on Monday represent a 19% premium over Starwood’s average stock price throughout the 20 days ending October 26, the date that acquisition speculations began.
Lazard and Citigroup offered financial advice to Starwood, and Deutsche Bank advised Marriott. Cravath, Swaine & Moore counseled Starwood and Gibcon, Dunn and Crutcher provided legal counsel to Marriott.
Here’s a look at Marriott’s current stock performance on Monday as well as that of up to a year ago:
Marriott International Inc. (MAR - Analyst Report)
And the same for Starwood:
Starwood Hotels & Resorts Worldwide Inc. (HOT - Analyst Report)
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