Marriott International has announced a deal to buy Starwood Hotels & Resorts Worldwide for $12.2 billion to create the world's largest hotel chain with top brands including Sheraton, Ritz Carlton and the Autograph Collection.
The combined company will own or franchise more than 5,500 hotels with 1.1 million rooms worldwide.
It will also give Marriott greater presence in markets such as Europe, Latin America and Asia including India and China.
Marriott currently has three-quarters of its rooms in the US. Starwood, which also owns St Regis and Aloft hotel brands, gets nearly two-thirds of its revenue from outside the US.
"We have been in the business for a long time but Starwood is more global than Marriott is," Marriott chief executive Arne Sorenson, who will lead the combined company, said. "It's a good thing that we will have more sources (of growth) from around the world," the CEO added.
Starwood had essentially put itself up for sale in April, when it said it was considering strategic alternatives, taking about 14% off its stock up to Friday's close.
The company, which had a market value of $12.67 billion as of Friday, had reached out to InterContinental Hotels Group, Wyndham Worldwide and sovereign wealth funds for a possible deal since July, sources had told Reuters.
Under the deal, Starwood's shareholders will get 0.92 Marriott Class A share and $2 in cash for each share held. They will also get about $7.80 per share from the spinoff of Starwood's timeshare business and subsequent merger with Interval Leisure Group, announced in February.
Marriott said it expected one-time transaction cost of $100-$150 million related to the acquisition, which was expected to add to earnings from the second year after it closes.
After the transaction closes, the company is expected to add three Starwood members to its board, which will expand to 14 members.
The deal is expected to close in the middle of next year, the companies said.
