Marriott International has agreed to acquire Starwood Hotels & Resorts Worldwide, in a deal that will create the world’s largest hotel company.
The purchase, which is worth approximately US$12.2 billion, will lead to the merger of two of the hospitality industry’s biggest names, creating a company with a combined portfolio of more than 5,500 hotels and 1.1 million rooms.
The agreement will bring all 10 of Starwood’s brands under the Marriott umbrella, including the famous Sheraton marque, the ultra-luxury St Regis, and the stylish W Hotels.
JW Marriott Jr, Marriott’s executive chairman, commented; “We have competed with Starwood for decades and we have also admired them. I’m excited we will add great new hotels to our system and for the incredible opportunities for Starwood and Marriott associates. I’m delighted to welcome Starwood to the Marriott family.”
Marriott’s president & CEO, Arne Sorenson, added; “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. Today is the start of an incredible journey for our two companies.”
The Starwood acquisition marks the latest – and by far the most significant – step in Marriott’s recent expansion-through-acquisition strategy. In April 2014, the company completed a US$200 million deal for South Africa’s Protea Hospitality Group, instantly making it the largest hotel chain in Africa, and earlier this year it snapped up Canada’s Delta Hotels & Resorts for US$134m.
The sale of Starwood had been rumoured for some time, with other major hotel groups and Chinese investors variously reported to be interested. With a strong portfolio and some of the most innovative brands in the industry, such as W, Aloft and Element, it is not surprising that Starwood was an attractive proposition.
Bruce Duncan, Starwood’s chairman, commented; “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.”
Under the terms of the agreement, Starwood shareholders will receive 0.92 Marriott shares and US$2 in cash for each Starwood share. Starwood shareholders will also receive US$7.80 per share from the merger of Starwood’s timeshare business with Interval Leisure Group, which has an estimated value of approximately US$1.3bn.
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