The transaction is expected to close in mid-2016, subject shareholder approvals, the completion of Starwood’s planned disposition of its timeshare business, regulatory approvals and the satisfaction of other customary closing conditions. In addition, shareholders will also receive $7.80 per share from the company’s timeshare business spinoff and the merger with Interval Leisure Group Inc. “When we look at Starwood, we see many aspects of its business that compliment Marriott”.
Advertisement
Stamford, Conn.-based Starwood, had been seeking to either buy other hotel chains – or be bought for a few months.
The combination of the two companies creates a more comprehensive portfolio.
“To be successful in today’s marketplace, a wide distribution of brands and hotels across price points is critical”, Adam Aron, Starwood’s chief executive, said during a briefing with investors.
The top brands for Marriott in India include Ritz Carton, JW Marriott and Marriott, while the top brands for Starwood include St Regis, Westin, Sheraton and Le Meridien.
After the transaction closes, the company is expected to add three Starwood members to its board, which will expand to 14 members. This merger will result in a new world’s – largest hotel company.
Just a few hours after the deal was announced on Monday, Starwood shares dropped 3.6 percent and closed at US$72.27 (AU$102.03), while Marriott witnessed a rise of 1.4 percent in shares, closing at US$73.72 (AU$104.07), reported BBC. In July, it was rumored that Intercontinental Hotels (NYSE: IHG) was an interested buyer.
But now there’s a new suitor, and this time it’s no rumor: this morning Marriott global announced it will pay $12.2 billion – most of it in Marriott stock – to buy Starwood.
Both companies are also big players in North America.
Marketing has reached out to Marriott and Starwood for further comments. “I know we’ll do great things together as The World’s Favorite Travel Company”.
Starwood shareholders will receive 0.92 shares of Marriott worldwide, Class A common stock and $2.00 in cash for each share of Starwood common stock, a joint statement from the companies read.
The deal terms on Monday represent a 19 per cent premium over Starwood’s average stock price during the 20 days ending October 26, when takeover speculation began, the companies said. Marriott expects to save at least $200 million in annual costs by 2018.
Advertisement
Marriott’s strong loyalty program, Marriott Rewards with 54 million members will also combine with the Starwood Preferred Guest membership with 21 million members, creating a combined network of 75 million loyal customers.
