Marriott has just acquired Starwood to become the largest hotel company in the world
José Carlos Cortizo Pérez
Main page News

A $13 billion deal between the two largest hotel chains was announced today, bringing over 30 major hotel brands in 110 countries under one owner.

More than 30 hotel brands, 1.1 million rooms and almost 6.000 properties represented in 110 countries will be joined under one of the largest industry's acquisitions of the past years. As of today, Marriott International (NASDAQ: Marriott International [MAR]) has finally completed the acquisition of Starwood Hotels & Resorts Worldwide and became the biggest hotel company in the world.

Thanks to Starwood's strong presence in Asia, Middle East and Africa, the deal opens promising business opportunities for Marriott, whose market share in these countries is expected to double, said the company in today's announcement. Marriott has confirmed to purchase Starwood for about $13 billion and it expects to make at least $250 million in yearly cost synergies, as a result of the merge.

Marriott's CEO, Arne M. Sorenson, said that he sees "real advantages" in the size of his enlarged company. The WSJ cites the experts that believe that the merge will allow the company to renegotiate the collaboration terms with online travel agencies like Expedia (NASDAQ: Expedia [EXPE]) and claim better conditions in terms of OTA's booking commissions. However, such a large merger can also pose several business risks such as competition among Marriott's and Starwood's own brands as many of them operate in similar business classes and markets. However, Marriott's management seems to be very optimistic about the merger.

“Companies like Starwood come up for sale only every few decades,” said Sorenson.

The WSJ also mentions that many members of Starwood's loyalty program have been worried about what happens to their benefits when the merger actually takes place. Starwood claims to have the "best in class" loyalty program that offers its members multiple perks. Marriott replied in a statement to the consumers that the loyalty programs of the two giants will remain separate for the time being but the members will be able to transfer their "points" to the new joint loyalty program in the upcoming months. The company says the program's 85 million members will get additional benefits and hotel destinations in the new program.

Another important announcement is that Arne M. Sorenson will keep his role as a Chief Executive Officer of the company after the merger while 3 new Starwood's members will join Marriott's Board of Directors today.

As the merger was announced today, Starwood's stock will be unavailable for trading on NYSE. According to Marriott, Starwood's shareholders will get $21.00 in cash as well as 0.80 shares of Marriott's Class A stock per one share of Starwood. This is an already "sweetened" offer from Marriott as its initial offer that was discussed back March included 0.92 shares of Marriott and 2$ cash for each Starwood's share.

"Marriott intends to take the steps necessary to cause Starwood’s outstanding public debt to be "pari passu" with the outstanding public debt of Marriott International. Marriott remains committed to maintaining an investment grade credit rating and to continue managing the balance sheet prudently after the merger," the company said in the statement.

As of writing, MAR trades at $68.91, down 1.2%.

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