Marriott buys Starwood in $12.2 billion deal

US: Marriott and Starwood are to merge, creating the biggest hotel operator in the world.

US: Marriott and Starwood are to merge, creating the biggest hotel operator in the world.

On Monday, Marriott announced that it would acquire Starwood for $11.9 billion in stock and $340 million in cash, creating the world’s largest hotel company, with more than 5,500 owned or franchised hotels, with 1.1 million rooms around the world.

The deal means cash was used for just 2.8 per cent of the deal, which is the seventh-lowest percentage on record for cash-and-stock deals greater than $10 billion, according to data compiled by Dealogic.

Before the deal, IHG was the biggest operator in the world, with 4,900 hotels. It had been widely rumoured that Starwood would be sold over the next year, but Marriott emerged as a surprise bidder, with IHG, Hyatt and others rumoured to be in pole position.

Arne Sorenson, president and CEO of 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.”

Marriott and Starwood have a number of lifestyle brand between them, including Autograph Collection, W Hotels, Tribute Portfolio and the Luxury Collection. It is expected that some of these will be closed or merge.

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