The pharmaceutical merger deal is estimated to be worth $116 billion.
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Starwood shareholders would receive 0.92 shares of Marriott’s stock, as well as $2 in cash, for each share of Starwood. They will also be paid about $7.80 per share from the spin-off of Starwood’s timeshare business. The transaction has a value of $US72.08 a Starwood share.
The sources, who asked not to be identified because they were not authorized to speak on the record, said that Starwood left “no stone unturned” in its process of seeking a buyer.
Starwood’s stock closed at $74.99 per share on Friday, November 13, down from $76.23 per share one year ago. “But as the months went by we saw a relative shift in values of the companies”. Since the time this announcement was made, there has been speculation regarding potential buy for Starwood.
Last month, ValueWalk covered a report from CNBC indicating that Hyatt Hotels was in advanced discussions to acquire Starwood Hotels and Resorts Worldwide.
According to insiders close to the negotiations, Hyatt was wanting to buy Starwood in October. However, talks ended, and the deal never came about. But it hasn’t done anything like the deal it announced today (Nov. 16).
Sorenson said there are no plans to eliminate brands, even though a few like Marriott’s Renaissance hotels and Starwood’s Le Meridien serve similar audiences; but there could be a few tweaking or nipping and tucking, he said.
In an interview with Forbes, Arne Sorenson, President and Chief Executive Officer of Marriott worldwide assured readers that the points accrued from the loyalty programmes of both hotels are not going away anytime soon. The company’s strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, impressive record of earnings per share growth and increase in net income.
Sorenson would remain president and chief executive of Marriott.
Starwood has much to gain with the help of Marriott’s relationships as well. “I’m excited we will add great new hotels to our system and for the incredible opportunities for Starwood and Marriott associates”. Shareholders will own 37 percent of the combined company. The timeshare transaction is expected to close prior to the Marriott-Starwood purchase.
Marriott now has more than 2,000 employees at its Bethesda headquarters.
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The deal, which will combine Marriotts two dozen brands – including Marriott, Courtyard, Ritz-Carlton and Fairfield Inn – with Starwood’s Sheraton, W, St. Regis and Westin nameplates, will result in a company with 5,500 properties and more than 1.1 million rooms.
