Starwood Hotels & Resorts Worldwide Inc., the world's largest hotel owner, agreed to buy Vistana Inc. for about $645 million in cash, stock and assumed debt, to enter the time-share resort business.
White Plains, N.Y.-based Starwood said it will pay $19 a share, 10% more than Vistana's closing price Friday. Vistana holders would receive $5 a share in cash and the rest in Starwood stock. Starwood also would assume about $240 million of debt.
Orlando, Fla.-based Vistana operates and develops time-share resorts and had 1998 sales of $234 million.
The purchase would give Starwood Chairman Barry Sternlicht a team of experienced executives to oversee development of time-share projects at Starwood's vacation resorts and to sell time-share rentals to the millions of tourists who pass through Starwood's Sheraton, Westin and St. Regis hotel chains.
Starwood shares fell 56 cents to close at $28.50 on the New York Stock Exchange. Vistana rose 13 cents to close at $17.38 on Nasdaq.
"It makes enormous sense," said Credit Suisse First Boston Corp. analyst David Anders, who rates Starwood shares "hold." "There's a real opportunity to leverage their existing resorts, plus it presents cross-marketing opportunity, encouraging [hotel guests] to walk over and look at a time-share."
Merrill, Lynch & Co. analyst Denise Wilder Warren said investors were disappointed that Starwood didn't decide to buy a time-share company with international experience. Starwood operates hotels in 72 countries.