Marriott International and Starwood Hotels & Resorts Worldwide announced on Monday 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 30, 2015 totals over $2.7 billion.
Under the terms of the agreement, at closing, Starwood shareholders will receive 0.92 shares of Marriott International, Inc. Class A common stock and $2.00 in cash for each share of Starwood common stock. On a pro forma basis, Starwood shareholders would own approximately 37 percent of the combined company’s common stock after completion of the merger using fully diluted share counts as of September 30, 2015.
Transaction is expected to close in mid 2016.
“The driving force behind this transaction is growth”, said Arne Sorenson, President and Chief Executive Officer of Marriott International.
“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.”
According to Sorenson, 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”, Sorenson added.
PrintBruce Duncan, Chairman of the Board of Directors of Starwood Hotels & Resorts Worldwide, said that a combination with Marriott provides the greatest long-term value for the company’s shareholders and the strongest and most certain path forward for Starwood.
“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 said.