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This Merger is Creating the World’s Biggest Hotel Chain

Marriott International (MAR) this morning announced an agreement to acquire Starwood Hotels & Resorts Worldwide (HOT), in a $12.2 billion deal that would create the world’s largest hotel operator.

Under terms of the agreement, Marriott would pay around $340 million in cash and $11.9 billion of Marriott stock, following which Starwood shareholders would own around 37% of the combined company.

The $72.08 per share value to be received by Starwood holders is lower than the company’s $75 per share closing price last Friday, but does not include around $7.80 per share in value that is expected via a simultaneous spinoff of Starwood’s timeshare business and subsequent merger with Interval Leisure Group (IILG).

The deal comes after reports that several Chinese firms had interest in bidding for Starwood, in what would have been the largest-ever takeover of a U.S. company by a Chinese one. Hyatt Hotels (H) also was said to have submitted an offer.

Once Marriott’s deal for Starwood is closed, the combined company—to be led by Marriott president and CEO Arne Sorenson—would feature around 1.1 million rooms in 5,500 properties in more than 100 countries. Combined pro forma fee revenue is expected to top $2.7 billion.