Manama: Marriott International will buy Sheraton owner Starwood Hotels & Resorts Worldwide in a $12.2 billion deal to create the world’s largest hotel chain.
The combined company will own or franchise more than 5,500 hotels with 1.1 million rooms worldwide, giving Marriott greater presence in markets outside the US.
Starwood, which gets nearly two-thirds of its revenue from outside the US, had essentially put itself up for sale in April, when it said it was considering strategic alternatives.
Starwood shareholders will receive 0.92 Marriott Class A shares and $2 in cash for each Starwood share, the companies said yesterday.
This works out to $72.08 per share for Starwood, a discount of about four per cent to the stock’s Friday close.
Starwood shareholders will also get about $7.80 per share from the spinoff of its timeshare business and subsequent merger with Interval Leisure Group.
Starwood, the owner of S Regis and Aloft hotel brands, had reached out to InterContinental Hotels Group, Wyndham Worldwide Corporation and sovereign wealth funds for a possible deal since July, sources had said.
“This greater scale should offer a wider choice of brands to consumers, improve economics to owners and franchisees, increase unit growth,” Marriott chief executive Arne Sorenson, who will head the combined company, said.
Marriott said it expected one-time transaction costs of $100m-$150m related to the deal.
The company expects the acquisition to add to earnings from the second year after it closes.
Marriott will expand its board to 14 from 11 members, following the closing of the deal, expected in mid-2016.
&uuid=(email))