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 offer broader choice for guests, greater opportunities for associates and should unlock additional value for Marriott and Starwood shareholders.
Combined, the companies operate or franchise more than 5,500 hotels with 1.1 million rooms worldwide.
The combined company’s pro forma fee revenue for the 12 months ended September 30th, 2015 totals over $2.7 billion.
Under the terms of the agreement, at closing, Starwood shareholders will receive 0.92 shares of Marriott International Class A common stock and $2.00 in cash for each share of Starwood common stock.
Total consideration to be paid by Marriott totals $12.2 billion consisting of $11.9 billion of Marriott International stock, based on the 20-day volume weighted average price of Marriott stock ending on November 13th, 2015, and $340 million of cash, based on approximately 170 million fully diluted Starwood shares outstanding at September 30th, 2015.
Arne Sorenson, president, 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. We expect to benefit from the best talent from both companies as we position ourselves for the future.”
One-time transaction costs for the merger are expected to total approximately $100 to $150 million. Transition costs are expected to be incurred over the next two years.
