NEW YORK (TheStreet) -- Starwood Hotels & Resorts Worldwide (HOT will be acquired by Marriott International (MAR) in a deal worth $12.2 billion, the two companies announced this morning, creating the world's largest hotel company.
Under the terms of the agreement, Starwood shareholders will get 0.92 shares of Marriott and $2 in cash for each share of Starwood stock for a total of $11.9 billion in stock and $340 million in cash.
The deal is expected to be completed by the middle of 2016.
"We are excited to play a vital role in the creation of the biggest and best hotel company in the world with tremendous upside potential," Starwood CEO Adam Aron stated. "The combination of our two companies brings together the best in innovation, culture and execution."
This merger will create a portfolio with over 5,500 hotels with 1.1 million rooms globally.
Starwood Hotels & Resorts Worldwide shares are plunging 5.76% to $70.67 in pre-market trading on Monday.
Shares of Marriott are retreating 2.38% to $71.07 in Monday's pre-market trading session.
Travel and tourism stocks are generally lower this morning following Friday's terrorist attacks in Paris.
Based in Stamford, CT, Starwood Hotels & Resorts Worldwide operates as a hotel and leisure company worldwide.
Separately, TheStreet Ratings team rates STARWOOD HOTELS&RESORTS WRLD as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
We rate STARWOOD HOTELS&RESORTS WRLD (HOT) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity and good cash flow from operations. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, STARWOOD HOTELS&RESORTS WRLD's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has increased to $331.00 million or 31.87% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 2.77%.
- HOT, with its decline in revenue, slightly underperformed the industry average of 1.4%. Since the same quarter one year prior, revenues slightly dropped by 4.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- After a year of stock price fluctuations, the net result is that HOT's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- STARWOOD HOTELS&RESORTS WRLD's earnings per share declined by 10.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, STARWOOD HOTELS&RESORTS WRLD increased its bottom line by earning $3.50 versus $2.92 in the prior year. For the next year, the market is expecting a contraction of 13.7% in earnings ($3.02 versus $3.50).
- You can view the full analysis from the report here: HOT