Starwood Hotels and Marriott sign amended merger agreement
Starwood’s Board of Directors determined that revised terms from Marriott constitute a superior proposal compared to previously announced offer by Consortium led by Anbang Insurance Group.
Revised terms value Starwood at $79.53 per share or $13.6 billion; total per share value of $85.36 with separate ILG transaction consideration.
- Increased cash consideration to $21.00 for each share of Starwood common stock.
- Revised exchange ratio of 0.80 shares of Marriott common stock for each share of Starwood common stock.
- Targeted annual G&A synergies increased to $250 million run‐rate.
- Marriott and Starwood special stockholder meetings to be held on April 8, 2016 with transaction closing planned for mid‐2016.
- Marriott conference call 8:00 a.m. ET on Monday, March 21, 2016
Marriott International, Inc. and Starwood Hotels & Resorts Worldwide, Inc. announced today that the companies have signed an amendment to their definitive merger agreement that creates the world’s largest hotel company.
This revised agreement offers superior value for Starwood’s shareholders, the ability to close quickly, and provides value creation potential that will allow both sets of shareholders to benefit from improved financial performance. Marriott and Starwood have already obtained important regulatory consents necessary to complete the transaction, including clearing pre‐merger antitrust reviews in the United States and Canada.
Arne Sorenson, President and Chief Executive Officer of Marriott International, said: “After five months of extensive due diligence and joint integration planning with Starwood, including a careful analysis of the brand architecture and future development prospects, we are even more excited about the power of the combined companies and the upside growth opportunities. We are also more confident of achieving our updated target of $250 million of cost synergies. With a higher cash component in the purchase price, we have improved the transaction’s financial structure as well.
“We expect to accelerate the growth of Starwood’s brands, leveraging Marriott’s worldwide hotel development organization and owner and franchisee relationships. On the top line, combined sales expertise and increased account coverage should drive additional customer loyalty and increase revenue. Hotel level cost savings should benefit owners and franchisees, including better efficiencies in reservations, procurement and shared services. The company will have a broader global footprint and the most powerful frequent traveler programs in the industry, strengthening Marriott’s ability to serve guests wherever they travel.
“We are also bringing together two of the most talented and experienced teams in the industry. Together, they will combine their innovative ideas and service commitment to deliver unforgettable guest experiences.”
Bruce Duncan, Chairman of the Board of Directors of Starwood Hotels & Resorts Worldwide, said, “We are pleased that Marriott has recognized the value that Starwood brings to this merger and enhanced the consideration being paid to Starwood shareholders. We continue to be excited about the combination of Starwood and Marriott, which will create the world’s largest hotel company with an unparalleled platform for global growth in the upscale segment. We are also pleased with the progress the two companies have made toward closing.”
“Throughout this process, our Board of Directors has remained laser‐focused on maximizing value for Starwood shareholders, and Marriott’s revised offer provides the highest value to our shareholders through long‐term upside potential from shared synergies and ownership in one of the world’s most respected companies, as well as significant upfront cash consideration.
“With its asset light business model, multi‐year industry leading unit growth, powerful brands, and consistent return of capital to shareholders, Marriott stock has consistently traded at valuation premiums to its public peers.”
Marriott expects the transaction to be roughly neutral to adjusted earnings per share in 2017 and 2018.
Marriott remains committed to maintaining an investment grade credit rating after the merger. While Marriott anticipates its leverage will be modestly higher than targeted levels when the transaction closes, it expects to reach targeted leverage of 3.0x to 3.25x adjusted debt to adjusted EBITDAR by year‐end 2016.