BY Richard Summerfield
The European Commission has finally acquiesced and granted unconditional antitrust approval to US hotel chain Marriott International’s $12.1bn cash and share purchase of Starwood Hotels and Resorts Worldwide Inc. Under the terms of the original Marriott/Starwood merger, Starwood shareholders will receive 0.8 shares of Marriott common stock plus $21.00 in cash.
Marriot had initially moved to acquire Starwood in March after the Chinese insurance company Anbang unexpectedly decided to abandon is $14bn all-cash offer for Starwood. Marriott and Anbang had been embroiled in a three week bidding war for Starwood, however the US firm is inching closer to being able complete the deal and combine its brands – which include the Ritz-Carlton – with Starwood’s own Sheraton and Westin properties.
Marriott currently operates more than 4500 hotels in 85 countries. Starwood, by comparison, manages around 1300 hotels in nearly 100 countries. As a result of the merger, Marriott will become the largest hotel company in the world. It is also believed that the firm will benefit from synergies of around $200m a year across the combined firm’s 29 hotel chains.
In a statement announcing the Commission’s decision, EU Competition Commissioner Margrethe Vestager said: “This is an important merger for the hotel industry and its customers. Our investigation confirmed that the hotel sector will remain competitive for customers in Europe following the merger.”
The Commission investigated the impact of the planned takeover in Barcelona, Milan, Venice, Vienna and Warsaw, where both brands have a strong presence. The investigation indicated that the merger would have little impact in any of these cities, given the strong offering from competing hotels in each location.
Though the deal has won European approval, the transaction is not yet confirmed. Chinese antitrust clearance is still required before the merger can be completed. Both parties have confirmed that they expect final clearance to arrive in the next month or so, meaning the deal will close in July at the earliest.
However, like much of the global economy, the threat posed by Brexit may yet have an impact on the completion of the deal. Immediately following the 'Leave' vote by the UK, stock prices for many hotel companies, including Marriott, fell dramatically. Though the decline has no direct impact on the relationship of the merger agreement, it could potentially impact the amount of money owed to Starwood’s shareholders.