Outline Buyer & Seller

Marriott International, Inc. (NASDAQ: MAR) is an American multinational diversified

hospitality company that manages and franchises a broad portfolio of hotels and related
lodging facilities. Founded by J. Willard Marriott, the company is now led by his son,
Executive Chairman Bill Marriott, and President and Chief Executive Officer Arne Sorenson.

Marriott International is headquartered in Bethesda, Maryland, in the Washington, DC

metropolitan area.[2] It has more than 5700 properties in over 110 countries and territories
around the world, over 1.2 million rooms (as of September 2016), and additional 195,000
rooms in the development pipeline.[3][4][5] In 2017, Marriott was ranked #33 on Fortune's
"100 Best Companies to Work For" list, its twentieth appearance on the list.[6]

Starwood Hotels and Resorts Worldwide, LLC is a subsidiary of Marriott International. Prior
to its merger with Marriott, it was an American hotel and leisure company headquartered in
Stamford, Connecticut.[7][8] It was one of the world's largest hotel companies that owns,
operates, franchises and manages hotels, resorts, spas, residences, and vacation ownership
properties under its 11 owned brands. As of 1 December 2014, Starwood Hotels and Resorts
owned, managed, or franchised over 1,200 properties employing over 180,400 people, of
whom approximately 26% were employed in the United States.[9]

Marriott International Inc. completed its acquisition of Starwood Hotels & Resorts
Worldwide for $13 billion, which has made it the worlds largest hotel chain. The combined
entity will have 30 hotel brands under its umbrella with greater than 5,800 properties and
more than one million hotel rooms. It will have presence in more than 110 countries. This
would also help Marriott go past InterContinental Hotels Groups766,000 rooms and 773,000
rooms of Hilton brand.

On November 16, 2015, Marriott announced the acquisition of Starwood Hotels and Resorts
Worldwide for $13 billion.[37] A competing offer for Starwood at $14 billion from a
consortium led by China's Anbang Insurance Group was announced March 3, 2016, moving
Starwood to cease the deal with Marriott and pursue the offer from Anbang Insurance
Group.[38][39] After Marriott raised its bid to $13.6 billion on March 21, Starwood
terminated the Anbang agreement and proceeded again with the merger with Marriott.[40]
Following all necessary regulatory approvals in the United States and around the world over
the course of 2016, Marriott closed the merger with Starwood on September 23, 2016,
creating the world's largest hotel company with over 5700 properties, 1.1 million rooms, and
a new portfolio of 30 brands.[41]

The Starwood acquisition gives Marriott a larger non-US presence; approximately 75% of
Starwoods revenues are from foreign markets.[42] The acquisition is the largest of its sort
since 2007, when Blackstone acquired Hilton for $26 billion. There is a $400 million breakup
fee if the transaction is not completed. Executives noted that total transaction and integration
expenditures may exceed $100 million.[42]
Price

Mode of payment

According to the terms of the deal, shareholders of Starwood would receive $21 per share in
cash and 0.80 shares of Marriott for each share they held of Starwood.

Special consideration

members of Starwood and Marriotts two loyalty programs will be able to link their accounts
together. Each Starwood point will be worth three Marriott Rewards points.

Financing

Advisors/ Lawyers/ Auditors

Lazard and Citigroup were financial advisors to Starwood Hotels & Resorts Worldwide and Deutsche
Bank Securities and Goldman Sachs were the financial advisors to Marriott International. Cravath,
Swaine & Moore served as legal counsel to Starwood Hotels & Resorts Worldwide and Gibson, Dunn
& Crutcher served as legal counsel to Marriott International on the transaction.
(http://news.marriott.com/2016/09/marriotts-acquisition-of-starwood-complete/)

Strategy of Acquirer and Target(2-3 page note)

Starwood put itself up for sale in April 2015. The Stamford, Connecticut, company had
struggled to grow as fast as its rivals, particularly in "limited service hotels," which are
smaller properties which don't have restaurants or banquet halls. They are often located on
the side of the highway, near airports or in suburban office parks.

To get Starwood, Marriott had to outbid China's Anbang Insurance Group. U.S. and
European anti-trust regulators were quick to approve the sale but the Chinese government
hesitated, delaying the sale by months.

Marriott and Starwood like other hotel chains own very few individual hotels. Instead
they manage or franchise their brands to hundreds of individual owners, often real estate
development companies. Those individual hotel owners are responsible for setting nightly
room rates. It isn't uncommon for a developer to own a Marriott, Hilton, Hyatt and Sheraton
in the same city.

The purchase gives Marriott more leverage with corporate travel departments who often look
for one giant chain to house all of their employees. It also gives Marriott more power over
Expedia and Priceline, the two giant online travel agencies that sell rooms on behalf of hotel
companies in exchange for a commission. The hotel industry has spent the last year trying to
get travelers to book directly with them instead of the travel agencies to avoid paying those
fees.
Marriott has thrived as an "asset light" company, owning a handful of hotels. Starwood has
been selling off properties, while singing long-term management agreements for those same
hotels.

Key drivers for value creation or Synergy Creation

Transaction Benefits

Marriotts acquisition of Starwood enables the combined company to expand the scope of its
distribution and portfolio while deploying its larger scale to realize cost efficiencies in its corporate
and property operations. As previously stated, Marriott is confident the company can achieve $250
million in annual corporate cost synergies. Additional synergies at the property level should come in
the form of leveraging scale in operations and sharing best practices. Combined sales expertise and
improved account coverage are expected to provide both enhanced efficiencies and increased
revenue opportunities for managed and franchised properties.

These enhanced efficiencies and revenue opportunities should drive improved property-level
profitability as well as greater owner and franchisee preference for the combined companys
brands, which will encourage new hotel development, Sorenson said. As new travel
destinations emerge, Marriott can be counted on to be there.

One-time transaction costs for the merger are expected to total approximately $140 million.
Marriott intends to take the steps necessary to cause Starwoods outstanding public debt to be
pari passu with the outstanding public debt of Marriott International. Marriott remains
committed to maintaining an investment grade credit rating and to continue managing the
balance sheet prudently after the merger.

Risks and Challenges

Boosted by its $13.3-billion acquisition of Starwood Hotels & Resorts in September 2016,
Marriott International has demonstrated strong global performance in its first quarter results
with Starwood on board.

The Bethesda, Maryland-based company, now the worlds largest hotel company, beat Wall
Streets expectations both in terms of revenue and in earnings, posting earnings per share of
$1.01 and total revenues of $5.56 billion, a 47.7 percent increase from the same period last
year when Starwood wasnt yet part of the company.

Net income was $365 million, up 67 percent from the same period last year. Marriotts base
management and franchise fees also grew significantly from last years $200 million to $629
million this year, thanks to the Sept. 23 acquisition of Starwood for some $13.3 billion.
Marriott expects to collect anywhere from $3.21 billion to $3.23 billion in fee revenues for
the full year in 2017.

Global revenue per available room (RevPAR), a performance metric often used by the hotel
industry, was up 3.1 percent, and the companys RevPAR performance in North America,
Europe, Greater China, and Asia-Pacific was stronger than expected. The company added
more than 17,000 rooms to its system in the first quarter as well, and saw a 2 percentage point
increase in overall occupancy.

The company expects total costs related to its merger with Starwood for 2017 to come in
around $100 million.

the biggest risk or threat to the success of Marriotts integration of Starwood: figuring out the
technology platforms that would link all of its more than 6,100 hotels worldwide, which Marriott
hopes to complete by the end of 2018.

technology platforms will really allow us to drive the revenue lift we believe is available by
having one reservation platform and one loyalty program and of course, secondarily, also
allows us to deliver these technology platforms at lower costs for our owners, because well
be supporting one and not two.

Sorenson noted, for example, that the companys recent investment in PlacePass, a tours-and-
activities metasearch platform, is one example of technology that Marriott wants to be able to
link to its loyalty programs and all of its dot.com sites