Together, the companies will operate or franchise 5,500 hotels with a total of 1.1 million rooms.
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Sorenson said the merger should offer the consumer a broader choice of brands, improve the economics for franchisees and owners, increase the unit growth and enhance the long term value for shareholders.
The USA hotel industry is in its sixth year of recovery from the recession and is facing supply surges in cities including NY and Seattle.
There has been plenty of rumor and speculation in recent months about what would happen to Starwood Hotels & Resorts since its board of directors made a decision to look for ways to maximize shareholder value.
While Starwood is smaller than Marriott or Hilton, it has more hotels in China than any other US hotelier, and an extensive operation in Hawaii.
The deal is expected to close mid-2016.
Marriott worldwide is poised to become the world’s biggest hotel chain as it has announced its intention to purchase its rival Starwood. After the acquisition is complete, holders of Starwood stock will retain 37 percent ownership in the new company, according to the NY Times.
More than 75 million members belong to the loyalty programs offered by the two companies, leaving a few customers to question just how the merger will affect their account. Based on Marriott’s 20-day VWAP ending 13 November 2015, the merger transaction has a current value of $72.08 per Starwood share, which includes the $2 cash per share consideration. Starwood left “no stone unturned” in its process of seeking a buyer, said the sources, who asked not to be named because they were not authorized to speak on the record.
The deal will come with $100 million to $150 million in one-time transaction costs, which the company expects to incur over the next two years. In addition, he said, Marriott was attracted to Starwood’s global reach and appeal, including its rewards program, to young travelers.
Marriott adds in the press release that the transaction combines their strong presence in the luxury and select-service tiers, as well as the convention and resort segment, with Starwood’s leading lifestyle brands and worldwide footprints. Separately, they will also get $7.80 per Starwood share upon completion of a spin-off of the company’s timeshare business to Interval Leisure Group.
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“This is a transformative event for Marriott”, Arne Sorenson, Marriott’s president and chief executive, said in a Monday morning briefing with investors. “We will take the best of both of these programmes and make sure that those bests are preserved and that the program is enhanced”, he said.
