Marriott wins big from Avendra purchase
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Marriott wins big from Avendra purchase

The world’s largest luxury hotelier, Marriott International, saw its share price rise on Monday as news of an acquisition broke. While Marriott is neither buyer nor bought, the company is a majority shareholder in the latter. Food services company Aramark is buying Avendra LLC, of which Marriott owns 55%. The deal will bring in about $650 million for the hotelier, which brightened up investors. The stock was trading up by 0.51% on the day.

Marriott’s share price has appreciated by 39% year to date

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SOURCE: Yahoo Finance

While Marriott will receive the lion’s share of the income that Avendra’s sale will generate, the overall price paid will be $1.35 billion. The remainder of that money will go to the “other partners” behind Avendra: Hyatt, Accor, ClubCorp, and Intercontinental Hotels.

Between them, these hospitality companies formed Avendra in 2001 by merging their procurement businesses. Marriott invested around $13 million at the time, and has since recovered that through dividends. A $650 million payout for the sale is quite the return.

Marriot says that it will enter a five-year procurement service agreement with Aramark, and says that the transaction will be “immaterial” to its financial results. Nonetheless, it will benefit hotels, owners, and franchisees in a number of ways, as Marriott plans to reinvest the cash to benefit the hotels in its system.

Disclosure

Dominion holds Marriott International in its Global Trends Luxury Fund.


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