Starwood acquires Westin Hotels for $1.5 billion
SEATTLE (AP) _ Starwood Lodging Trust, the nation’s largest hotel real estate investment trust, and its hotel management company announced on Tuesday the purchase of Westin Hotels & Resorts for $1.57 billion in cash, securities and assumed debt.
The acquisition creates a company with 219 hotels worldwide and in 38 states. Combined revenues are expected to top $4 billion, Starwood said.
Starwood Lodging Trust and Starwood Lodging Corp., both based in Phoenix, are buying Westin from a group of investors including Starwood Capital Group, Goldman, Sachs & Co., and California hotel company Edward Thomas Cos.
Starwood Capital is a separate entity from Starwood Lodging, but both are headed by Barry Sternlicht, who will become chairman of the new Westin. Westin was offered for sale earlier this year, with Starwood considered a leading contender, but its owners also considered taking the chain public through a stock offering.
Although smaller than the $1.78 billion merger announced last week by Promus Hotel Corp. and Doubletree Corp., the acquisition is ``a monumental event in the lodging industry,″ said Bjorn Hanson, chairman of Coopers & Lybrand lodging and gaming group.
Westin, which has been rapidly expanding since it was purchased from Aoki Corp. in 1994, now is in a position to rival other global chains such as Marriott and Hilton, Hanson said.
Starwood can pair its tax and cost advantages in raising capital as a REIT with Westin’s established reputation for up-scale hotels, he said.
``Put those two structures together and this becomes a very powerful force,″ Hanson said.
As part of the deal, Starwood will acquire interests in 13 hotels owned by Westin, including Westin Hotels in Seattle, Cincinnati and Indianapolis. It also will acquire for an additional $258.6 million three other hotel properties recently obtained by Westin: the Westin Tabor Center in Denver, Westin Peachtree Plaza in Atlanta and Westin Resort St. John in the Virgin Islands.
The purchase price includes $178 million in cash, 11.6 million shares of Starwood Lodging Trust preferred stock and 991,000 limited partnership units of SLT Realty Limited Partnership and SLC Operating Limited Partnership. Starwood also will assume just over $1 billion of Westin’s debt.
The transaction is expected to close by Jan. 31. Starwood’s management company, Starwood Lodging Corp., will change its name to Westin Hotels & Resorts Worldwide Inc., and Starwood Lodging Trust will become Starwood Hotels and Lodging Trust.
Sternlicht will continue as chairman and chief executive officer of Starwood and will become chairman of the new Westin. Juergen Bartels, now chairman and CEO of Westin, will stay on as CEO of the new company.
``The combination of Westin and Starwood is a great marriage,″ Sternlicht said in a news release.
Starwood’s stock rose 81 1/4 cents to close at $50.25 on the New York Stock Exchange.