Marriott Soars with Starwood in $12.2B Sale

Marriott is buying Starwood to make the largest hotel company in the world.

marriottstarwoodMarriott International is acquiring Starwood Hotels & Resorts to create the world’s largest hotel company.

Together, the company will be able to offer 1.1 million rooms in more than 5,500 hotels across more than 100 countries.

The deal was valued at $12.2 billion. Under the terms of the deal, Marriott will pay $72.08 a share in cash and stock for Starwood, whose brands include Westin, the W, Sheraton and St. Regis. For each share of stock, Starwood investors will receive $2.00 in cash and 0.92 shares of Marriott. Shareholders will own 37 percent of the combined company. Marriott also owns and operates Courtyard and Residence Inn hotels.

“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,” Marriott CEO Arne Sorenson said. “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.” Sorenson will remain president and CEO of the combined company.

The deal will come with $100 million to $150 million in one-time transaction costs.

Marriott will not be acquiring all of Starwood’s current business though. Starwood will spin-off its timeshare business. Shareholders will receive consideration from the spin-off of the Starwood timeshare business and subsequent merger with Interval Leisure Group, which has an estimated value of approximately $1.3 billion to Starwood shareholders or approximately $7.80 per Starwood share. The timeshare transaction is expected to close prior to the Marriott-Starwood purchase.

Deutsche Bank served as adviser to Marriott. Lazard and Citigroup served as advisers to Starwood.