USA: Marriott International Reaffirms Commitment To Merge With Starwood Hotels & Resorts Worldwide

Marriott International, Inc. reaffirmed its commitment to acquire Starwood Hotels & Resorts Worldwide, Inc. to create the world’s largest hotel company. The combined company will offer stockholders significant equity upside and greater long term value driven by a larger global footprint, wider choice of brands for consumers, improved economics to owners and franchisees leading to accelerated global growth and continued strong returns. Marriott is confident that the previously announced merger agreement is the best course for both companies.

On March 11, 2016 Starwood notified Marriott that it had received an unsolicited indication of interest in purchasing Starwood from a consortium of potential investors, led by Anbang Insurance Group. Marriott notes that this unsolicited indication of interest is highly conditional and non-binding. Marriott granted Starwood a waiver to expedite its evaluation of the letter from the interested consortium.

Marriott will monitor this development as it and Starwood continue to work toward the closing of its transaction and the successful integration of the two companies in anticipation of votes by each company’s stockholders on March 28, 2016.

Starwood stated that its Board of Directors has not changed its recommendation in support of Starwood’s merger with Marriott. Starwood has said that its Board, in consultation with its legal and financial advisors, will carefully consider the outcome of its discussions with the consortium in order to determine the course of action that it determines is in the best interest of Starwood and its stockholders.

Marriott and Starwood previously announced that they had satisfied the closing conditions in the merger agreement relating to the antitrust and competition authorities in the United States (under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and Canada, and the companies remain confident about achieving the remaining regulatory approvals and believe the combination can be closed expeditiously. Marriott has scheduled its special meeting of stockholders for March 28, 2016 for approval of the Starwood merger.

Marriott has sufficient cash resources to pay the cash portion of the merger consideration and there is no financing contingency in the merger agreement. Marriott expects that the Starwood merger will be completed by mid-year 2016. Under the terms of the merger agreement, should Starwood terminate its agreement with Marriott because it decides to enter into another deal or should Starwood change or withdraw its recommendation to its stockholders to vote in favor of the Marriott merger (and in certain other circumstances), Starwood would be obligated to pay Marriott a $400 million termination fee in cash.

UAE: Sheraton Opens Luxury Sharjah Resort

Starwood Hotels & Resorts Worldwide, Inc. has formally announced the opening of the Sheraton Sharjah Beach Resort & Spa, marking its entry in the Emirate of Sharjah and bolstering Sharjah’s proposition for luxury tourism.

The Sheraton Sharjah Beach Resort & Spa features 349 spacious guest rooms and suites, and provides panoramic views of the Arabian Gulf and the city of Sharjah. The resort opens with Al Qubtan, a beach side restaurant and the Link@Sheraton Café inside the hotel, while three more food and beverage outlets will open in November and another in December.

The new Sheraton is expected to boost availability of luxury accommodation for tourists, expand options for businesses in Sharjah and provide a new upscale venue for social events. The hotel offers the largest hotel conference facilities in the city with over 2,100 square meters of meeting and event space, including two large ballrooms and and nine meeting rooms, making it an ideal choice for both social and business functions.

Sharjah currently has a strong pipeline of new hotels planned, including a Four Points by Sheraton Sharjah in the city’s Al Rifaa area, which is expected to open in May 2017. The emirate already has more than 100 hotels and hotel apartments, including properties managed by some of the leading five star hotel brands in the world.

The luxury hotel segment has recently seen an increase in activity with the construction of Al Jabal Resort, The Chedi Khorfakkan on Sharjah’s east coast by Sharjah Investment and Development Authority (Shurooq) the announcement in May this year of plans for new US$100 million (AED 367m) art and culture themed 5-star luxury beachfront hotel and resort in Sharjah city by the Accor Group.

Sharjah Tourism Vision 2021, a tourism development strategy announced by the Sharjah Commerce and Tourism Development Authority (SCTDA) earlier this year, targets family tourism, Muslim tourists and those seeking art and culture. According to the SCTDA, 70 per cent of Sharjah’s tourists are families, with a high percentage of Muslim visitors. Sharjah plans to attract more than 10 million tourists to the emirate by year 2021.

USA: Starwood Seen As Acquisition Target For Hyatt, Chinese Firms

At least three Chinese firms also are vying to acquire the Stamford, Connecticut-based company.

Starwood Hotels & Resorts Worldwide Inc, the lodging company that hired an adviser earlier this year to help explore strategic options, has a new suitor.

Hyatt Hotels Corp. is in advanced talks to buy Starwood, according to a CNBC report Wednesday. At least three Chinese firms also are vying to acquire the Stamford, Connecticut-based company, said a person with knowledge of the matter. Also Wednesday, Starwood said its timeshare unit, Vistana Signature Experiences, will be spun off and acquired by Miami-based Interval Leisure Group Inc.

Starwood, whose brands include W, Westin and St Regis, announced in April that it hired Lazard Ltd and was exploring options including a possible sale. The company, led by interim Chief Executive Officer Adam Aron after the resignation of longtime head Frits van Paasschen in February, had been lagging behind competitors such as Marriott International Inc and Hilton Worldwide Holdings Inc in expanding the number of hotels carrying its brands.

Starwood “owns a portfolio of generally well-regarded global lodging brands, it’s got a big footprint internationally and it’s got a big footprint in the US with some of the better-known brands around,” said Robert LaFleur, a hotel analyst at JMP Securities LLC in New York. “From a takeout standpoint, it’s pretty attractive.”

Shares rise

Starwood shares rose 6.3 per cent to close at $79.50, a three-month high. Hyatt slipped 1.8 per cent to $49.63. Starwood has a market value of about $13.5 billion (Dh49.5 billion), and Hyatt’s is about $7.1 billion.

Amy Patti, a spokeswoman for Chicago-based Hyatt, and Carrie Bloom, a Starwood spokeswoman, declined to comment on the CNBC report.

“Our progress and our process is active and nearing conclusion,” Aron said of Starwood’s strategic review on the company’s earnings conference call Wednesday. “Indeed I’d be surprised if we don’t have answers to these questions before the end of this calendar year.”

CNBC’s David Faber said a Hyatt deal for Stamford, Connecticut-based Starwood could come as soon as next week, citing people familiar with the talks. The company’s founding Pritzker family controls Hyatt through its ownership of super- voting Class B shares.

Hyatt’s well-established brands, especially Hyatt Place, in the limited-service hotel segment could help Starwood plug a hole in its own select-service business, said Michael Bellisario, an analyst at Robert W. Baird & Co.

Formidible competitor

“Hyatt’s problem is it’s just smaller — about one-fifth of the size of Hilton and Marriott,” he said. If it combines with Starwood, “they would become a very formidable competitor.”

Hyatt had 41 owned or leased hotels with about 20,000 rooms as of June 30, in 10 countries. The company has said it wants to increase the proportion of rooms outside the US from 18 per cent to 22 per cent in owned and leased properties. Hyatt owns assets in Paris, London, Zurich, Seoul and Mexico City in addition to the US. It has 618 properties in 51 countries, including hotels it manages.

Starwood, as of September 30, owns, leases or holds through joint ventures a total of 32 hotels worldwide, including St Regis properties in New York, San Francisco and Florence, Italy, and Luxury Collection hotels in Spain, Austria and Argentina. They have a total of 12,339 rooms. Including hotels it manages, Starwood has more than 1,270 properties in about 100 countries.

The company is spinning off and selling Vistana, which includes 22 timeshare resorts with more that 220,000 owners and more than 5,000 employees, to Interval in a deal valued at about $1.5 billion. Starwood’s sale of the business may be a prelude to a combination with Hyatt, which previously sold its own timeshare unit to Interval, Bellisario said.

“The resulting hotel-only business should be more attractive to any potential acquirer,” he said. “It lessens the total investment needed by about $1.5 billion and the timeshare business is not as well understood by the investment community.”

Combined platforms

One benefit to a takeover by Hyatt “would definitely be the scale of the combined platforms,” said Lukas Hartwich, a lodging analyst at Green Street Advisors LLC. “Combined, the two companies would have over 500,000 rooms, which would considerably close the gap between them and Hilton and Marriott.”

The US hotel industry is in its sixth year of recovery from the recession, with revenue per available room — a measure of occupancy and rates — increasing 6.7 per cent this year through September, according to research firm STR Inc. Revpar rose 8 per cent in September. Occupancies across all US hotels averaged 65.4 per cent in the 12 months through September, the highest in any one-year period since 1988, and the average daily room rate also reached a record, STR said.

“In the hotel industry, as an operator or owner, life is pretty good or awesome, depending on where you are,” said Jan Freitag, senior vice president at the Hendersonville, Tennessee- based firm.

Chinese suitors

At least three Chinese firms also are vying to acquire Starwood, said a person with knowledge of the matter. HNA Group Co, hotelier Jin Jiang International (Holdings) Co and sovereign wealth fund China Investment Corp have each applied to the Chinese government for approval to proceed with offers for all or part of Starwood, the person said.

One company that’s not pursuing Starwood Hotels is McLean, Virginia-based Hilton.

“You can rule out Hilton’s interest,” CEO Christopher Nassetta said on the company’s third-quarter earnings conference call Wednesday. “We are not involved in the process in any way.”

Interval Leisure To Buy Starwood’s Vacation Ownership Business

Deal to give Interval Leisure Group exclusive rights to Starwood’s Sheraton and Westin brands in the vacation ownership market

Interval Leisure Group (ILG) said it would buy hotel operator Starwood Hotels & Resorts Worldwide Inc’s vacation ownership business, which it valued at about $1.5 billion (Dh5.5 billion).

ILG, which provides non-traditional lodging such as vacation rentals, said a unit would buy the business, Vistana Signature Experiences, after Starwood — which itself has been seeking a buyer — spins it off.

The deal will give ILG exclusive rights to Starwood’s Sheraton and Westin brands in the vacation ownership market.

On completion of the deal, Starwood shareholders will own about 55 per cent of the combined vacation ownership business on a fully diluted basis and ILG shareholders will own the rest.

China’s sovereign wealth fund and two Chinese companies had expressed interest in buying Starwood, joining other potential suitors from around the world.

Starwood shares rose as much as 12.5 per cent to $77.10 on Tuesday after the Wall Street Journal first reported that the Chinese companies were interested in Starwood, which has a market value of about $13 billion.

Strategy

Starwood, which also owns the St Regis brand, said in February that it would spin off Vistana, which operates high-end timeshare resorts, as a part of its “asset-light” strategy to focus on operating properties instead of owning them.

The deal is expected to be tax-free to Starwood shareholders and close in the second quarter of 2016, the companies said.

Starwood, whose shares were up 2.8 per cent at $76.90 in premarket trading, also reported a better-than-expected third-quarter profit, driven by higher occupancy rates.

Moelis & Co was ILG’s financial adviser for the Vistana deal. Citigroup and Credit Suisse advised Starwood.