Marriott International Signs Agreement with Whitbread
Marriott International has signed an agreement with Whitbread PLC to establish a 50/50 joint venture.
It will acquire Whitbread’s portfolio of 46 franchised Marriott and Renaissance hotels of over 8,000 rooms, and for Marriott to take over management of the entire portfolio of hotels upon the transfer of the hotels to the new joint venture. The joint venture expects to sell properties to investors over the next two years subject to long-term Marriott International management agreements. The agreements are subject to Whitbread shareholder approval and other conditions. Closing is expected to occur in May 2005.
Edwin D. Fuller, president and managing director of Marriott Lodging – International, said, “We are pleased to announce this agreement today, and want to acknowledge the strong relationship our two companies have enjoyed over the years. We look forward to operating the best portfolio of full service hotels in the U.K. with a highly valued and effective team of dedicated associates, and to new opportunities for growth of our management business in Britain and across Europe.”
Marriott will contribute to the joint venture 90 million pounds Sterling in the second quarter of 2005 for a 50 percent stake in the joint venture. Whitbread will contribute its interest in the 46 hotels, the joint venture will place approximately 660 million pounds of debt on the property, and Whitbread will receive 710 million pounds and the other 50 percent stake in the venture. As the joint venture sells the hotels, Marriott’s interest in the joint venture will be repaid.
Marriott estimates that the after-tax earnings per share impact of the joint venture and related transactions will be modestly accretive in 2005 and in 2006.
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