BETHESDA, MD and STAMFORD, CT—Weeks after reports surfaced of merger discussions between Hyatt Hotels Corp. and Starwood Hotels & Resorts Worldwide, a lodging sector mega-deal is taking place, but with a different buyer. Bethesda, MD-based Marriott International Inc. and Starwood Hotels said Monday their boards had approved a definitive merger agreement valued at $12.2 billion.
"The driving force behind this transaction is growth," says Arne Sorenson, president and CEO of Marriott. "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."
At Stamford, CT-based Starwood Hotels, interim CEO Adam Aron says the deal will create "the biggest and best hotel company in the world with tremendous upside potential. The combination of our two companies brings together the best in innovation, culture and execution." The combined organization will operate or franchise more than 5,500 hotels with 1.1 million keys worldwide.
Post-merger, Sorensen will serve in the same leadership capacity of the combined organization, which will be headquartered in Bethesda. Marriott's board will increase from 11 to 14 with the addition of three Starwood directors.
Not included in the merger is SVO, Starwood's timeshare business, which is being spun off in a transaction that's expected to close prior to the Marriott/Starwood combination. However, in addition to the consideration from Marriott for the Starwood Hotels acquisition, Starwood shareholders will receive an additional $7.80 per share from the timeshare spinoff.
Lazard and Citigroup are serving as financial advisors to Starwood Hotels, while Deutsche Bank Securities is the financial advisor to Marriott. Starwood Hotels and Marriott are receiving legal counsel on the merger from Cravath, Swaine & Moore and Gibson, Dunn & Crutcher, respectively.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
