In one of the mega takeovers in global hospitality industry, Marriott International Inc will acquire Starwood Hotels & Resorts Worldwide in a deal valued at around USD 12.2 billion, creating the world's largest hotel company.
The boards of directors of Marriott International Inc. and Starwood Hotels & Resorts Worldwide Inc have unanimously approved a definitive merger agreement under which the companies will create the world's largest hotel company, Marriott International said in a statement.
The combined company will have 1.1 million rooms in more than 5,500 hotels, spanning the globe in over 100 countries with 30 leading brands.
"Total consideration to be paid by Marriott totals USD 12.2 billion consisting of USD 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 USD 340 million of cash, based on approximately 170 million fully diluted Starwood shares outstanding at September 30, 2015," the statement said.
Under the terms of the agreement, at closing, Starwood shareholders will receive 0.92 shares of Marriott, Class A common stock and USD2 in cash for each share of Starwood common stock.
"On a proforma basis, Starwood shareholders would own approximately 37 per cent of the combined company's common stock after completion of the merger using fully diluted share counts as of September 30, 2015," it said.
Commenting on the development, Marriott International President and Chief Executive Officer Arne Sorenson 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."
Starwood Hotels & Resorts Worldwide Chairman of the Board of Directors Bruce Duncan said the company's board concluded that the combination with Marriott provided the greatest long-term value for its shareholders and the strongest and most certain path forward for the 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," Duncan added.
Marriott said one-time transaction costs for the merger are expected to total approximately USD100-150 million, which are expected to be incurred over the next two years.
It will assume Starwood's recourse debt at the closing of the transaction, which is subject to approval regulatory authorities and shareholders of both the companies.
Assuming receipt of the necessary approvals, the parties expect the transaction to close in mid-2016, the statement added.
Sorenson will remain President and Chief Executive Officer 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.
