From a strategic standpoint Starwood shareholders will receive 0.92 shares of Marriott International, Inc. Class A common stock and $2.00 in cash for each share of Starwood common stock. On a pro forma basis, Starwood shareholders would own approximately 37% of the combined company’s common stock after completion of the merger using fully diluted share counts as of September 30, 2015.
Total consideration to be paid by Marriott totals $12.2 billion consisting of US $11.9 billion of Marriott International stock, based on the 20-day VWAP (volume weighted average price) of Marriott stock ending on November 13, 2015, and US $340 million of cash, based on approximately 170 million fully diluted Starwood shares outstanding at September 30, 2015.
Based on Marriott’s 20-day VWAP ending November 13, 2015, the merger transaction has a current value of US $72.08 per Starwood share, including the $2 cash per share consideration. Starwood shareholders will separately receive consideration from the spin-off of the Starwood timeshare business and subsequent merger with Interval Leisure Group, which has an estimated value of approximately US $1.3 billion to Starwood shareholders or approximately US $7.80 per Starwood share, based on the 20-day VWAP of Interval Leisure Group stock ending November 13, 2015. The timeshare transaction should close prior to the Marriott-Starwood merger closing.
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One-time transaction costs for the merger are expected to total approximately $100 to $150 million. Transition costs are expected to be incurred over the next two years. They cannot be estimated at this time, but are expected to be meaningful.
Marriott will assume Starwood’s recourse debt at the closing of the transaction.
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