Marriott International Inc will buy Sheraton owned Starwood Hotels & Resorts Worldwide Inc in a US$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 United States.
Starwood, which gets nearly two-thirds of its revenue from outside the United States, 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 US$2 in cash for each Starwood share, the companies said.
This works out to US$72.08 per share for Starwood, a discount of about four percent to the stock?s Friday close, Reuters reported.
Starwood shareholders will also get about US$7.80 per share from the spinoff of its timeshare business and subsequent merger with Interval Leisure Group Inc.
Starwood, the owner of brands including Sheraton, St Regis and Aloft, had reached out to InterContinental Hotels Group, Wyndham Worldwide Corp and sovereign wealth funds for a possible deal since July, sources had told Reuters.
?This greater scale should offer a wider choice of brands to consumers, improve economics to owners and franchisees, increase unit growth,? said Marriott chief executive Arne Sorenson, who will head the combined company.
Marriott said it expected one-time transaction costs of US$100 million-US$150 million related to the deal. The company expects the acquisition to add to earnings from the second year after the deal is closed.
Marriott will expand its board to 14 from 11 members, following the closing of the deal, expected in mid-2016.
Lazard and Citigroup advised Starwood on the deal and Deutsche Bank Securities advised Marriott.
Marriott to buy Starwood for US$12.2 billion
