Expanding its presence in the hotel business overseas, Marriott International said Tuesday that it had agreed to buy the Renaissance Hotel Group, a company based in Hong Kong that operates and franchises 150 hotels in 38 countries.
The acquisition for about $1 billion, which also involves taking over $50 million in Renaissance debt, would more than double the number of hotels run by Marriott outside the United States. The deal would help Marriott cement relationships with international travelers and make it more competitive abroad with the upscale properties of ITT Sheraton and Hilton Hotels Corp."We are now becoming a truly global hotel company," said J.W. Marriott Jr., the chairman and chief executive of Marriott, who added that for the first time in the company's 40-year history it would have hotels in Japan, Italy, China, Russia, India and Turkey.
Marriott operates 1,075 hotels in the United States and 75 overseas, while all but 35 of Renaissance's hotels are outside the United States. Among the hotels that would be run by Marriott after the acquisition are the Renaissance in New York, the Stanford Court in San Francisco and airport hotels in Denver, Los Angeles and Orlando, Fla. Marriott anticipates retaining the Renaissance name.
The Hong Kong company that has majority control of Renaissance, New World Development Co., has agreed to the acquisition in which shareholders will receive $30 a share in cash, a 19 percent premium over Friday's closing price of $25.125. Renaissance shares closed at $29.75 each Tuesday, up $4.625; Marriott shares closed at $56.25, up $1.
The acquisition by Marriott comes about a month after Doubletree Corp. agreed to pay $890 million for Renaissance, or $8 a share. Doubletree said Tuesday that it would not bid against Marriott, but would receive a $15 million breakup fee from Renaissance under terms of its earlier agreement. Doubletree closed at $43.125, up $2.50.
In addition to hotels under the same name, Renaissance runs properties under the New World and Ramada International names. After the acquisition, Marriott will have a total of 10 hotel brands. Current Marriott brands include the Fairfield economy properties and Ritz-Carlton, the luxury chain of which it owns 49 percent, with options to buy the remainder.