Starwood Hotels has agreed an improved takeover bid from Marriott International worth $13.6 billion to create the world’s largest hotel company.
The board of Starwood announced that the revised terms from Marriott “constitute a superior proposal” compared to the previously announced offer by a consortium led by the Chinese Anbang Insurance Group.
The deal would see Starwood’s timeshare business spun off and acquired by Interval Leisure Group.
Bruce Duncan, chairman of of Starwood, said: "We are pleased that Marriott has recognised 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.
"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.”
Marriott said it was confident of achieving $250 million in annual “cost synergies” within two years, up from $200 million estimated in November when announcing the original merger agreement.
Marriott International chief executive, Arne Sorenson, 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.”
He added: "We expect to accelerate the growth of Starwood's brands, leveraging Marriott's worldwide hotel development organisation 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 traveller 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."
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