Marriott Unit to Join With French Firm

Marriott International Inc. on Wednesday said it will separate its hotel, nursing home and distribution businesses into a new company and merge its North American food services unit with French company Sodexho Alliance.

The food service merger with Sodexho would form North America’s biggest catering and institutional restaurant company.

Before the merger occurs, Marriott said, it will spin off its nonfood service operations to shareholders tax-free.

The spun-off company, which would retain the Marriott International name and trade on the New York Stock Exchange, would own 51% of the catering company created with Sodexho, which would own 49%.

Paris-based Sodexho would give $305 million to its North American food unit before merging it with Marriott’s to form Sodexho Marriott Services. Sodexho Alliance would get 124 million shares of the new company, which is to be publicly traded. Marriott valued the assets it would give Sodexho Marriott at $2 billion.

Marriott International also said that before the spinoff it will offer to redeem $720 million of outstanding senior debt and $682 million of commercial paper.

Marriott shares rose $1.94 to close at $73 on the New York Stock Exchange.

Analysts said the move would allow Marriott to concentrate on hotel management and would make Sodexho part of a company with sales of at least $4 billion in the largest market for food preparation services to hospitals, companies and others.

Washington-based Marriott International is one of the world’s largest hotel management companies, with brands including Marriott, Ritz-Carlton, Courtyard, Fairfield Inn and Residence Inn.

Sodexho builds restaurants and commercial properties and provides services including operations management, budget planning, catering and travel services.