The boards of directors of both Marriott International and Starwood Hotels & Resorts Worldwide have unanimously approved a definitive merger agreement under which the companies will create the world’s largest hotel company. Combined, the companies operate or franchise more than 5,500 hotels with 1.1 million rooms worldwide. The combined company’s pro forma fee revenue for the 12 months ended September 30, 2015 totals over US$2.7 billion.
Arne Sorenson, president and chief executive officer, Marriott International said, “The driving force behind this transaction is growth. This is an opportunity to create value by combining the distribution and strengths of Marriott and Starwood, enhancing our competitiveness in a quickly evolving marketplace. This greater scale should offer a wider choice of brands to consumers, improve economics to owners and franchisees, increase unit growth and enhance long-term value to shareholders. Today is the start of an incredible journey for our two companies. We expect to benefit from the best talent from both companies as we position ourselves for the future. I know we’ll do great things together as the world’s favorite travel company.”
Under the terms of the agreement, at closing, Starwood shareholders will receive 0.92 shares of Marriott International. Class A common stock and US$ 2.00 in cash for each share of Starwood common stock. On a pro forma basis, Starwood shareholders would own approximately 37 per cent of the combined company’s common stock after completion of the merger using fully diluted share counts as of September 30, 2015.
JW Marriott, Jr., executive chairman and chairman of the Board of Marriott International said, “We have competed with Starwood for decades and we have also admired them. I’m excited we will add great new hotels to our system and for the incredible opportunities for Starwood and Marriott associates. I’m delighted to welcome Starwood to the Marriott family.”
Arne Sorenson will remain president and chief executive officer of Marriott International following the merger and Marriott’s headquarters will remain in Bethesda, Maryland. Marriott’s Board of Directors following the closing will increase from 11 to 14 members with the expected addition of three members of the Starwood Board of Directors.
The transaction is subject to Marriott International and Starwood Hotels & Resorts Worldwide shareholder approvals, completion of Starwood’s planned disposition of its timeshare business, regulatory approvals and the satisfaction of other customary closing conditions. Assuming receipt of the necessary approvals, the parties expect the transaction to close in mid-2016.
