On Monday, Host Marriott Corp. announced that it plans to pay around 4.04 billion dollars to acquire a portfolio of 38 luxury hotels from Starwood Hotels and Resorts Worldwide Inc..

Apparently both parties have a lot to gain from this deal.
Starwood has been selling properties from Los Angeles to Madrid and now it plans to deal more with operating the hotels, rather than owning them. They had planned to sell assets that worth between 2 to 4 billion dollars. Starwood attests that the deal provides the company with the right to continue to manage the properties for up to 40 years, including Sheraton, W. Westin, St. Regis, Luxury Collection hotels. The hotels that Marriott plans to buy are 28 in North America, 6 in Europe, 2 in Asia and another 2 in Latin America.

On the other hand, Host Marriott has the chance to expand the portfolio with new properties and take over the market in Europe, by acquiring hotels in Italy, Spain, Great Britain and Poland. To pay the deal, they want to take on around 700 million dollars in debt and then to issue about 2.3 billion dollars equity to Starwood shareholders and the rest to pay in cash.

The representatives from Host Marriott hope for the portfolio to generate 335 million dollars to 365 million dollars of EBITDA in 2006. This acquisition will also add 3 to 5 cents per share.
Goldman Sachs&Co. were the ones who advised Host Marriott on the deal, and the Starwood was advised by Bear, Stearns & Co. and Deutsche Bank AG.