Starwood Hotels in Merger Talks

Six Continents is in talks to buy Starwood Hotels & Resorts Worldwide Inc. in a deal that could create a worldwide hotel giant with brands including Holiday Inn, Inter-Continental, Westin and Sheraton, a source and analysts said Monday.

According to a source familiar with the situation who spoke on condition of anonymity, an outline of a possible deal has been agreed upon, but many other major points have yet to be resolved.

A spokesman for White Plains, N.Y.-based Starwood, whose brands include Sheraton, Westin and W, was not immediately available for comment.

Britain’s Sunday Telegraph reported last weekend that London-based Six Continents was prepared to mount a $7.6-billion bid for Starwood. Six Continents, which is based in London, declined to comment Sunday.

Starwood’s current share price would give it a market capitalization of about $5.4 billion. But analysts said any buyer also would have to take on the company’s large debt load, which would bring the value of a deal, including assumed debt, to $11 billion before accounting for any premium on the stock.

Shares of Starwood closed up 12 cents to $27.26 Monday on the New York Stock Exchange.