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Summary: Hotel chains are entering the merger market, with Marriott and Starwood becoming the first to take the plunge.
Marriott International and Starwood Hotels and Resorts are to become one in a $12.2 billion deal. The merger of the two large hotel chains would bring Marriott to over 5,500 hotels and 1.1 million rooms across the globe.
The boards of directors for both companies have approved the merger and now await the finalized approval from shareholders and regulators. The CEO of the combined company will be the current Marriott CEO and President Arne Sorenson, and the headquarters will remain in Bethesda, Maryland.
Starwood first announced that they were seeking to reorganize or sell in April, causing their shares to crash. The deal places the purchase price per share at around $72. Starwood brings a stronger clientele of the younger travelers, a market that Marriott has been trying to attract for some time. Starwood also has a strong international presence.
The move comes at a time when online travel agencies have been taking part in their own mergers. Kellner Capital research director, Scott Kim, says, “The online travel reservations operators have been consolidating as well so as online travel aggregators get larger, I think the suppliers, which are namely the hotel operators and reservation systems, really have to try and get larger as well to keep some balance in power in negotiations.” Expedia recently purchased Orbitz and recently announced they would be purchasing HomeAway.
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Originally, talks between a Starwood and Hyatt merger had been discussed. Starwood brands include W Hotels, Westin, Aloft, and St. Regis, with 21 million members of the Starwood Preferred Guest. Marriott brings The Ritz-Carlton, Courtyard, and Residence Inn to the table and 54 million members in their Marriott Rewards program. The combined company plans to keep the best parts of both rewards programs.
Starwood sought financial advice from Lazard and Citigroup with Cravath, Swaine & Moore as their legal advisors. Marriott was under the guidance of Deutsche Bank for financial advice and Gibson, Dunn & Crutcher for legal advice.
Source: http://www.usatoday.com/story/travel/2015/11/16/marriott-buys-starwood-hotels/75858600/
Photo: loyalty360.org
