The boards of directors from both companies have unanimously approved a definitive merger agreement under which the companies will create the world’s largest hotel company.
Together the companies operate or franchise more than 5,500 hotels, with 1.1m rooms worldwide. The combined company’s pro forma fee revenue for the 12 months that ended on September 30, 2015 totals more than $2.7bn (£1.78bn).
One-time transaction costs for the merger are expected to total approximately $100 to $150m (£66 to £99m), while transition costs are also expected to incur over the next two years. Marriott will assume Starwood’s recourse debt at the closing of the transaction.
Arne Sorenson will remain president and CEO of Marriott International following the merger and Marriott’s headquarters will remain in Bethesda, Maryland. Marriott’s board of directors will increase from 11 to 14 members, with the expected addition of three new joiners from the Starwood board of directors.
Sorenson 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."
Bruce Duncan, chairman of the board of directors of 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."
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