Marriott to purchase Starwood Hotels

On Monday, Marriott International announced its purchase of Starwood Hotels and Resorts Worldwide for $12.2 billion in cash and stock, creating the world’s largest hotel company.

“The driving force behind this transaction is growth,” said Arne M. Sorenson, the Marriott president and chief executive, in a news release. “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.”

The deal would solve the big question that has been looming over Starwood for nearly a year. As its stock traded behind its peers, the company’s president, Frits van Paasschen, resigned and was replaced by Adam Aron on an interim basis. Starwood said in April that it was working on strategic alternatives, including a potential sale.

Since then, there has been increasing rumors about which hotelier could be a buyer. There was speculation in the markets about a potential deal with Holiday Inn owner Intercontinental Hotels Group and, more recently, Hyatt Hotels. But in the end, Marriott prevailed.

The combined Marriott and Starwood company will have more than 5,500 owned or franchised hotels with 1.1 million rooms around the world, uniting Starwood’s brands, which include Sheraton, Westin, W and St. Regis, with Marriott’s two dozen brands, including Marriott’s Courtyard, Ritz-Carlton and Fairfield Inn.

Marriott said it expects to deliver at least $200 million in annual savings in the second year after closing.