WASHINGTON -- Marriott International, in a major global
expansion, said it would acquire Renaissance Hotel Group,
outbidding Doubletree Corp. and several other companies.
Marriott said the acquisition, which does not include
significant real estate, is valued at $1 billion, including debt
assumption and transaction costs.
Renaissance, which is based in Hong Kong, operates 150 hotels in
38 countries under the Renaissance, Ramada and New World brands,
and Marriott said it would continue to operate and develop all
three brands.
Doubletree offered in early January to buy the firm in a stock
and cash deal worth $850 million. But that offer was followed by
bids from several hotel companies, reportedly including Wyndham and
Bass PLC, parent of Holiday Inn.
In a statement, Doubletree said it would not top Marriott's
price, but instead would accept a $15 million break-up fee from
Renaissance.
Through the acquisition, Marriott will double its presence
outside the U.S., bringing its total number of properties to more
than 1,300 and its number of brands to 10.
J.W. (Bill) Marriott, Jr., chairman of the board and chief
executive officer, called the deal an "historical alliance."
Marriott said, "We are now a global hotel company," Marriott
said.
"Many pathways to growth have been opened up by this joining
together with Renaissance Hotel Group."
The company will add 40 markets in countries including Russia,
China, Japan, India, Italy and Turkey.
Significantly, the New World brand will give Marriott both new
locations in the Asia/Pacific regions and an infrastructure already
in place to support growth plans, Marriott officials said.
Marriott said it also plans to continue to expand the
full-service Renaissance brand in the U.S. and to operate Ramada
International as a moderate-priced lodging product
internationally.
Ramada International has properties in 22 countries. In the
U.S., the Ramada name is licensed to HFS under a long-term
agreement.
Hong Kong-based New World Group, which owns 54.4% of
Renaissance, agreed to the Marriott acquisition, and Marriott said
it expects to commence a tender offer of $30 a share for the
remaining shares in the publically traded company later this
week.
Dr. Henry Cheng, chairman of Renaissance and managing director
of New World, will serve on the Marriott board of directors.
Marriott and New World plan to be partners in future expansions,
officials said.
New World or its affiliates own 83 of the hotels operated by
Renaissance, and after the deal is completed, Cheng will be the
second largest owner of Marriott 's properties after Host
Marriott.
Some of the Renaissance properties previously were operated
under the Stouffer brand name, which was acquired by the Cheng
family in 1993. The conversion of the former Stouffer properties to
the Renaissance brand was completed last spring.
Officials said Renaissance's holdings will be integrated into
Marriott's marketing reservations, operating and administrative
systems, helping to achieve a cost savings.
Marriott's last major acquisition was Ritz-Carlton, in which
Marriott purchased a 49% stake in 1995, for $200 million.
Marriott said the deal will put the company ahead of its goal of
having 2,000 hotels by the year 2000.