Marriott and Starwood deal creates world's biggest hotelier

17 November 2015

Marriott International says a deal to buy rival Starwood Hotels for $12.2 billion will deliver at least $200 million in annual cost savings.

The merger, announced yesterday, will create the world’s largest hotel company with more than 5,500 hotels across 100 countries, 1.1 million rooms and $2.7 billion in annual revenue.

Marriott said it expects to deliver at least $200 million in annual cost savings in the second full year after the merger, which will be accomplished by "leveraging operating and general and administrative efficiencies".

Economies of scale will be achieved in areas including reservations, procurement and shared services, the statement said.

Marriott will pay $11.9 billion in stock and $340 million in cash under the deal, which combines Marriott’s 19 brands with Starwood’s Westin, W and St. Regis chains.

"The driving force behind this transaction is growth,” said Arne Sorenson, president and CEO of Marriott International.

“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.”

Bill Marriott, executive chairman and chairman of the board of Marriott International, added: “We have competed with Starwood for decades and we have also admired them.”

Bruce Duncan, chairman of the board of directors at Starwood Hotels & Resorts Worldwide, said: “Our board concluded that a combination with Marriott provides the greatest long-term value for our shareholders and the strongest and most certain path forward for our company.”

The deal is subject to shareholder and regulatory approval.

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