- Daily Zen
Marriott International Inc. announced that it has signed a deal to acquire the Delta Hotels and Resorts brand and management and franchise business from a subsidiary of British Columbia Investment Management Corp. for $168 million.
Delta Hotels & Resorts is one of Canada’s largest hotel operators with 38 hotels and 10,000 rooms in more than 30 cities across the country. The brand has gained popularity due to its innovative approaches in technology and guest room design. Its new ModeRoom provides multiple connectivity options, a mobile-friendly design and free Internet.
The deal will invariably add another strong brand to Marriott’s offerings helping the hotel giant expand its global portfolio, which it has been focusing on lately.
When completed, the acquisition will boost Marriott’s distribution in Canada to more than 120 hotels and 27,000 rooms making Marriott the largest full-service hotel company in Canada.
“Delta has an impressive portfolio of hotels that are among the most preferred in Canada,” said Arne Sorenson, president and chief executive officer of Marriott International, through a press release. “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,” he added.
Under the agreement, the Bethesda-based hotel giant will take over the operations for the 38 Delta hotels and resorts, including the Delta Bessborough in Saskatoon and the Delta Regina. At stabilization, after realizing certain operating synergies, Marriott hopes the buying price to be nearly 10 times annualized earnings before interest, taxes, depreciation and amortization (EBITDA).
As far as British Columbia Investment Management Corp. (bcIMC) is concerned, the company’s affiliates own 13 Delta hotels (and one under development) and will sign new 30-year management agreements with Marriott for these properties. The rest 25 Delta hotels are owned by third parties (15 are managed by Delta and 10 are franchised). Five managed hotels (about 1,100 rooms) are still under development.
The transaction is subject to consent by third parties and governmental consents, including the Canadian Competition Bureau. The transaction is expected to be finalized in the second quarter of 2015 after assuming receipt of the necessary approvals. Marriott believes the transaction will not have a material impact on its 2015 results, other than the one-time transaction and integration costs.