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Marriott International To Acquire Starwood Hotels & Resorts Worldwide, Creating The WorldS Largest Hotel Company

The following excerpt is from the company's SEC filing.

Combined Company Will Have 1.1 Million Rooms in More Than 5,500 Hotels,

Spanning the Globe in Over 100 Countries

30 Leading Brands Will Provide Guests Unmatched Choices

Transaction Offers Substantial Economies of Scale

Combined Company Should Deliver Significant Capital Returns to Shareholders

Conference Call with Investment Community at 9:00 am ET, Today, November 16, with Simultaneous Webcast

Bethesda, MD, and Stamford, CT, November 16, 2015

Marriott International, Inc. (NASDAQ: MAR) and Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) announced toda y that the boards of directors of both companies have unanimously approved a definitive merger agreement under which the companies will create the worlds largest hotel company. The transaction combines Starwoods leading lifestyle brands and international footprint with Marriotts strong presence in the luxury and select-service tiers, as well as the convention and resort segment, creating a more comprehensive portfolio. The merged company will offer broader choice for guests, greater opportunities for associates and should unlock additional value for Marriott and Starwood shareholders. Combined, the companies operate or franchise more than 5,500 hotels with 1.1 million rooms worldwide. The combined companys pro forma fee revenue for the 12 months ended September 30, 2015 totals over $2.7 billion.

Transaction Highlights and Strategic Benefits

Summary of Transaction

: Under the terms of the agreement, at closing, 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 percent of the combined companys 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 $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 $340 million of cash, based on approximately 170 million fully diluted Starwood shares outstanding at September 30, 2015. Based on Marriotts 20-day VWAP ending November 13, 2015, the merger transaction has a current value of $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 $1.3 billion to Starwood shareholders or approximately $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.

Total Estimated Value to Starwood Shareholders

Share Price of Marriott International, Inc.

Cash Consideration Per Share

Value of Vistana Disposition

Total Value

Marriott 20-day VWAP ending November 13, 2015, calculated at 0.92 of $76.17

Based on ILG 20-day VWAP ending November 13, 2015. Excludes $132M of cash consideration and reimbursement from ILG to Starwood

After adjusting for the value of consideration to be separately received by Starwood shareholders in the Vistana transaction, the merger consideration represents a premium of approximately 6 percent over the Starwood stock price using the 20-day VWAP ending November 13, 2015 and a premium of approximately 19 percent using the 20-day VWAP ending October 26, 2015 (prior to recent acquisition rumors).

Leveraging Operating Efficiencies:

Marriott expects to deliver at least $200 million in annual cost savings in the second full year after closing. This will be accomplished by leveraging operating and G&A efficiencies.

Accretive to Earnings:

Marriott expects the transaction to be earnings accretive by the second year after the merger, not including the impact of transaction and transition costs. Earnings will benefit from post-transaction asset sales, increased efficiencies and accelerated unit growth.

Significant Capital Recycling Program:

Marriott expects Starwood to continue its capital recycling program, generating an estimated $1.5 to $2.0 billion of after-tax proceeds from the sale of owned hotels over the next two years. The hotels are expected to be sold subject to long-term operating agreements.

Continued Strong Returns to Shareholders:

On a pro forma combined basis, Marriott and Starwood generated $2.7 billion in fee revenue in the 12 months ending September 2015. In 2015, Marriott expects to return at least $2.25 billion in dividends and share repurchases to shareholders. Marriott believes it can return at least as much in the first year following the merger.

Accelerated Global Growth:

Marriott International expects to accelerate the growth of Starwoods brands, leveraging Marriotts worldwide development organization and owner and franchisee relationships. The combined company will have a broader global footprint, strengthening Marriotts ability to serve guests wherever they travel.

Lifestyle Leader:

Starwoods first-mover advantage in the lifestyle category, along with Marriotts broad range of brands in this segment, positions the combined company as a leader in the lifestyle space. With Marriotts strong owner and franchisee relationships, the combined company expects growth of its lifestyle brands to accelerate.

World-Class Associates:

This combination brings together two of the most talented teams in the industry. Together, they will combine their innovative ideas and...


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