Expects to Become Largest Full Service Hotelier in Canada
BETHESDA, MD – January 27, 2015 – Continuing its rapid global expansion, Marriott International, Inc. (NASDAQ: MAR) announced today it has signed definitive agreements to acquire the Delta Hotels and Resorts® brand and management and franchise business from Delta Hotels Limited Partnership, a subsidiary of British Columbia Investment Management Corporation (bcIMC) for C$168 million (approximately $135 million).
The Delta brand comprises a diverse range of hotels and resorts with 38 hotels and 10,000 rooms in more than 30 cities across Canada. Delta offers a fresh approach to the guest experience, including its new ModeRoom™ guest room designs, innovative use of new technologies, and new properties, such as its flagship Delta Toronto located at the hub of Canada’s hottest high-rise neighborhood, South Core. When completed, the transaction will increase Marriott’s distribution in Canada to more than 120 hotels and 27,000 rooms, making Marriott the largest full service hotel company in Canada.
Arne Sorenson, president and chief executive officer of Marriott International, said, “Delta has an impressive portfolio of hotels that are among the most preferred in Canada. With this acquisition, we are continuing our focus on building our brand portfolio and growing in attractive regions outside the U.S. Combining the strong Delta brand with Marriott’s hotel development expertise will accelerate growth of the brand in Canada and in other markets around the world.”
David Grissen, group president overseeing The Americas for Marriott International, said, “at completion, this transaction will propel Marriott to a leading position in Canada. Canada represents the largest international source market for our hotels in the United States, and the integration of Delta into Marriott’s 4,100 plus hotel global portfolio will provide new travel opportunities for both Delta and Marriott customers. We expect integrating Delta into Marriott’s systems, sales engines, Marriott.com, and the more than 49 million member Marriott Rewards loyalty program will create meaningful operational synergies for owners and franchisees.
Marriott’s Americas management team looks forward to working closely with Delta’s hotel owners and franchisees, and welcoming Delta employees, who will have access to a larger range of opportunities in North America and globally once the transaction closes.”
Under terms of the agreement, Marriott is acquiring the Delta management and franchise business, as well as the Delta brand and related intellectual property. At stabilization, after realizing certain operating synergies, Marriott expects the purchase price to be approximately 10 times annualized earnings before interest, taxes, depreciation and amortization (EBITDA).
bcIMC-affiliated entities own 13 Delta hotels (and one under development) and will sign new 30-year management agreements with Marriott for these properties. Third parties own the other 25 Delta hotels; 15 are managed by Delta and 10 are franchised. In total, five managed hotels (approximately 1,100 rooms) are under development.
The transaction is subject to receipt of certain third party and governmental consents, including by the Canadian Competition Bureau. Assuming receipt of the necessary approvals, the parties expect to close the transaction in the second quarter of 2015. Marriott does not expect the transaction will have a material impact on its 2015 results, excluding one-time transaction and integration costs.
Avington acted as exclusive financial advisor to bcIMC.
Note on forward-looking statements: This press release contains “forward-looking statements” within the meaning of U.S. federal securities laws, including the parties’ plans for closing; the resulting impact on the size of Marriott’s operations in Canada; Marriott’s expectations for Delta’s stabilized EBITDA and EBITDA multiple and Marriott’s 2015 earnings impact; and similar statements concerning anticipated future events and expectations that are not historical facts. We caution you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including the ability of the parties to agree on definitive transaction documents, the receipt of necessary consents, and other risk factors that Marriott identifies in its most recent quarterly report on Form 10 Q. Any of these factors could cause actual results to differ materially from the expectations expressed or implied in this press release. We make these forward-looking statements as of the date of this press release. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
