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11/16/15
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Marriott International has agreed to acquire Starwood Hotels & Resorts Worldwide in a deal that will create the world’s largest hotel company. Marriott will pay $12.2 bil in cash and stock for Starwood, whose brands include Westin, the W, Sheraton and St. Regis. The deal works out to about $72/share.
The combined firm will have over 1.1 million rooms in more than 5,500 hotels in 100 countries across the globe. The combined company’s pro forma fee revenue for the 12 months ended September 30, 2015 was over $2.7 bil.
The deal offers economies of scale that should help Starwood grow its brands internationally by using Marriott’s relationships. The merger is also expected to help both Marriott and Starwood in many areas, including reservations and procurement, and boosting property-level profitability. Arne M. Sorenson, Marriott president and chief executive, will retain his position in the new firm.
The transaction is the second-largest hotel buy in history, behind Blackstone’s $26 bil purchase of Hilton Hotels in 2007. Industry experts expect to see more travel industry-related mergers in the future.
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