Marriott is buying Starwood for $12.2 billion, creating the world's largest hotel company

Marriott International is acquiring Starwood Hotels & Resorts, creating the world’s largest hotel company.

The deal is valued at $US12.2 billion, consisting of $US11.9 billion worth of Marriott stock and $US340 million in cash. For each share of stock, Starwood investors will receive $US2.00 in cash and 0.92 shares of Marriott, with Marriott priced at $US72.08 per share.

Marriott (MAR) closed Friday at $US72.74. Starwood (HOT) closed at $US75.00.

Combined, the company will be able to offer 1.1 million rooms in more than 5,500 hotels across more than 100 countries.

“Marriott expects to deliver at least $US200 million in annual cost savings in the second full year after closing,” the announcement read. “This will be accomplished by leveraging operating and G&A efficiencies.”

“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,” Marriott CEO Arne Sorenson said. “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.”

Sorenson will remain president and CEO of the combined company.

The deal will come with $US100 million to $US150 million in one-time transaction costs, which the company expects to incur over the next two years.

Deutsche Bank served as adviser to Marriott. Lazard and Citigroup served as advisers to Starwood.

“I’m delighted to welcome Starwood to the Marriott family,” Marriott chairman J.W. Marriott Jr. said.

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