Marriott International on Tuesday said that it has filed a joint proxy and registration statement on Form S-4 with the U.S. Securities and Exchange Commission in connection with the company’s proposed acquisition of Starwood Hotels & Resorts Worldwide in a merger transaction. Once complete, the transaction would result in the world’s largest hotel company, with more than 5,500 hotels and 1.1 million rooms across 31 brands in over 100 countries. The combined company would be named Marriott International Inc. and be headquartered in Bethesda, Maryland.
R.W. Baird analyst David Loeb published a review of the filing with some interesting facts and figures. Here is a roundup of Loeb’s review:
- The S-4 filing reinforced Baird’s belief that Marriott pursued the merger with Starwood only when it became accretive for shareholders and with the S-4 filing it plans to resume aggressive share buybacks immediately.
- While most of the major U.S. lodging companies were approached by or indicated interest in pursuing a transaction with Starwood, only one other bidder was in the final stages of the process, which Baird believes was Hyatt. Based on November 13 closing prices, Hyatt’s offer for Starwood was 5.7% higher than Marriott’s but included greater cash consideration and was subject to more restrictive corporate governance provisions, including a classified board structure and super-voting shares. Baird believes Starwood’s board viewed a combination with a strategic partner as a way to generate the greatest long-term value-creation potential for its shareholders.
- Marriott’s projections for the combined company include the disposition of 19 hotels from 2016-18 (mostly in 2017), which management has previously stated is expected to generate US$1.5 billion to $2.0 billion of after-tax proceeds.
- On a standalone basis, Marriott’s comparable worldwide RevPAR growth projections are 5%, 4.3% and 3.4% in 2016, 2017 and 2018, respectively, which compares with Marriott’s current 2016 RevPAR growth guidance of 4%-6%. Management also expects net rooms growth of 7.4%, 8.8% and 8.7% in 2016, 2017 and 2018, respectively, above Marriott’s current 2016 guidance for 7% net rooms growth and well above 2017-18 expectations.