Marriott In $12.2bn Starwood Takeover

The world's largest hotel chain is getting bigger, with Marriott International (NasdaqGS: MAR - news) confirming a $12.2bn (£8bn) takeover of rival Starwood - best known for its Le Meridien and Sheraton brands.

Under the stock and cash deal, the combined company would have more than 1.1 million rooms worldwide in 5,500 properties.

Starwood had announced in April (LSE: 0N69.L - news) that its board was exploring strategic options - with market speculation on potential suitors ranging from UK-listed Intercontinental Hotels Group and more recently Hyatt Hotels.

Marriott said on Monday that under the terms of the agreement, Starwood shareholders would receive 0.92 shares of Marriott International and $2 in cash for each share of Starwood stock.

It (Other OTC: ITGL - news) would give Starwood shareholders 37% of the combined company after completion.

The deal hands Marriott, which has 19 hotel brands including Ritz-Carlton and Renaissance, access to a younger customer through Starwood's hotel chains and St Regis resorts.

Starwood is also the biggest operator of four and five star hotels in Asia.

Arne Sorenson, president and chief executive of Marriott International, 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."

Chairman of Starwood, Bruce Duncan, said: "During our comprehensive review of strategic and financial alternatives, it was clear that our talented people, world-class brands, global leadership and spirit of innovation were much admired and key drivers of our value.

"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."