Marriot International Inc. (MAR) has agreed to buy Starwood Hotels and Resorts Worldwide Inc. (HOT) in a $12.2 billion deal that will create the largest hotel chain in the world. The combined companies would include brands like the Ritz-Carlton, Sheraton and Autograph Collection.
Together, both companies would franchise or own over 1.1 million rooms and 5,500 hotels throughout the world. Marriott would also gain presence in Latin America, Europe, and Asia as a result of the deal.
Currently, three quarters of Marriott’s rooms are in the United States. Starwood, on the other hand, gets the majority of its revenues from outside the United States.
Starwood’s stock prices dropped 5.2% to $71.07 on Monday during premarket trading, well below the offer price of $72.08. The decline indicates that investors were not happy with the offer, which was a 4% discount on the stock’s price as of Friday’s close.
Marriott’s shares also dropped 1.3% to $71.65.
Starwood had been reaching out to other companies in the industry, including Wyndham Worldwide Corp (WYN) and InterContinental Hotels Group Plc (IHG), since July in hopes of making a deal.
Starwood shareholders will get $2 in cash for each share as well as 0.92 Marriott Class A shares. In addition, shareholders will also receive $7.80 per share from the company’s timeshare business spinoff and the merger with Interval Leisure Group Inc. (IILG).
The deal is expected to close in the middle of 2016.