In a deal that may be announced as soon as next week, Hyatt Hotels is believed to be in talks to buy Starwood Hotels and Resorts.
A source close to the matter told Reuters Hyatt’s management would control the combined company, however neither group has confirmed the negotiations.
Owner of the Westin, Sheraton and W Hotel brands, among others, Starwood is valued at around US$12.75 billion while Hyatt has a valuation of about $7.23 billion.
"My hunch is they (Hyatt) would be able to (buy Starwood). They could pull it off but it would be a stretch," said Argus Research Co analyst John Staszak. But Staszak said a foreign acquirer might be more desirable as it could pay more.
A source told Reuters three Chinese groups had also expressed an interest in the acquisition, while Starwood had reached out to potential bidders including UK-based InterContinental Hotels Group and Wyndham Worldwide Corp in July, three months after it decided to explore a sale.
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According to Forbes, Hyatt’s worldwide portfolio consists of 587 properties (around 155,000 rooms) while Starwood has 1,222 properties (around 354,000 rooms) as of end of 2014.
A combined group would still have less than Marriott’s and Hilton’s portfolio of 700,000 plus rooms each. But if Hyatt succeeded in buying Starwood, the American-focused group would significantly enhance its global footprint as nearly half (45%) of Starwood’s properties lie outside of the Americas region.
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