Exhibit 99(1)
MARRIOTT INTERNATIONAL TO MERGE ITS FOOD SERVICE AND FACILITIES MANAGEMENT
BUSINESS WITH SODEXHO ALLIANCE'S NORTH AMERICAN OPERATIONS, AND SPIN OFF TO
SHAREHOLDERS A NEW COMPANY COMPRISED OF ITS LODGING AND OTHER BUSINESSES
. MARRIOTT SHAREHOLDERS TO OWN 51% STAKE IN SODEXHO MARRIOTT SERVICES,
INC., WHICH WILL BE THE LARGEST CONTRACT SERVICES COMPANY IN NORTH AMERICA.
. NEW COMPANY MADE UP OF MARRIOTT'S LODGING, SENIOR LIVING AND
DISTRIBUTION SERVICES BUSINESSES TO BE SPUN OFF TO MARRIOTT INTERNATIONAL
SHAREHOLDERS.
. MARRIOTT'S FOOD SERVICE AND FACILITIES MANAGEMENT BUSINESS VALUED IN
PACT AT APPROXIMATELY $2 BILLION.
. MARRIOTT INTERNATIONAL SENIOR DEBT AND COMMERCIAL PAPER TO BE
REFINANCED.
WASHINGTON, D.C., Oct. 1, 1997 -- Marriott International, Inc. (MAR / NYSE) and
Sodexho Alliance, a worldwide food and management services organization
headquartered in France (listed on Paris Bourse), today announced they have
entered into a definitive agreement to combine Marriott's food service and
facilities management business (Marriott Management Services) with Sodexho
Alliance's North American operations. The combined company, Sodexho Marriott
Services, Inc., will be the largest provider of food and facilities management
services in North America, with over 4,800 accounts and annual sales in excess
of $4 billion. It is expected to be listed on the New York Stock Exchange.
Prior to the merger, a new company comprised of Marriott's lodging, senior
living and distribution services businesses will be spun off, on a tax-free
basis, to Marriott International shareholders. This new company, which will
adopt the Marriott International, Inc. name, will apply for listing on the New
York Stock Exchange.
Immediately following the spin-off, Sodexho Alliance will make a cash
contribution of approximately $305 million to its North American operations
(International Catering Corporation), which will then be merged with Marriott's
food service and facilities management business, to form Sodexho Marriott
Services, Inc. As consideration for the merger, Sodexho Alliance will receive
approximately 124 million common shares of Sodexho Marriott Services. Marriott
International shareholders and Sodexho will own 51 percent and 49 percent,
respectively, of Sodexho Marriott Services.
The spin-off and merger transactions are expected to be completed in early 1998.
Based on an estimate of the initial market value of Sodexho Marriott Services
common stock,
the merger indicates a total value for Marriott's food service and facilities
management business in excess of $2 billion, including debt to be retained by
Sodexho Marriott Services.
In connection with the allocation of debt between the new Marriott International
and Sodexho Marriott Services, it is Marriott International's intention to
preserve bondholder value. Prior to the spin-off, Marriott International intends
to offer to repurchase the outstanding public senior debt of the company and its
subsidiaries, currently totaling $720 million, through a tender offer. In
addition, Marriott International intends to repay all outstanding commercial
paper prior to the spin-off and merger transactions. The company's commercial
paper($683 million outstanding as of Sept. 26, 1997) is supported by a committed
bank revolving credit facility of $1.5 billion.
J.W. Marriott, Jr., chairman and chief executive officer of Marriott
International, Inc., and William J. Shaw, president and chief operating officer
of Marriott International, Inc., will assume the same positions with the new
Marriott International. Charles D. O'Dell, currently president of Marriott
Management Services, will become president and chief executive officer of
Sodexho Marriott Services, and Mr. Shaw will serve as chairman of the board.
Michel Landel, president and chief executive officer of Sodexho North America,
will become executive vice president of Sodexho Marriott Services.
Both Mr. Marriott and Pierre Bellon, chairman and chief executive officer of
Sodexho Alliance S.A., said they expect the planned transactions to create
significant value for their respective stakeholders.
"The merger provides Marriott shareholders with an immediate premium for our
food service and facilities management business," Mr. Marriott explained, "as
well as an ongoing stake in a strong and well-focused contract services company
with excellent growth prospects. With the industry consolidating and becoming
increasingly global, we are extremely pleased that Marriott Management Services
will be aligned with Sodexho Alliance, one of the largest and most successful
contract services organizations in the world."
"The transaction also provides the new Marriott International with substantial
investment capacity," Mr. Marriott continued. "This will enable us to pursue
additional growth opportunities in our businesses, extending Marriott's global
leadership in the hospitality industry."
Mr. Bellon said the merger would make Sodexho Alliance the world leader in food
and contract services.
"Sodexho Alliance is number one in Europe, and we have been considering various
alternatives for expanding our presence in the attractive North American
market," noted Mr. Bellon. "We have been successful in developing alliances
with organizations throughout the
world which share our values and are committed to providing the highest quality
service to clients and customers. Marriott Management Services is the ideal
partner to have in North America. We are extremely pleased with the
opportunities which will result from this combination, particularly for our
clients, our employees and our shareholders."
Sodexho Marriott Services, Inc.
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Mr. O'Dell said, "Sodexho Marriott Services will be the top provider of contract
services to the corporate, health care and education markets in North America.
Our clients will benefit from the combination of the best food and facility
programs and operating systems of the two separate entities, as well as the
broader range of value-added services we will be able to provide."
Mr. Landel said he is confident that employees of both Marriott Management
Services and Sodexho's North American operations will have enhanced career
development opportunities as a result of the merger.
"Sodexho Marriott Services will be well positioned to grow at above-average
rates," Mr. Landel explained. "We expect to capture a major share of new
business as more organizations recognize the cost savings and performance gains
we can help them achieve through outsourcing."
Mr. O'Dell also said he anticipates that Sodexho Marriott Services will have
considerable appeal to investors. "This will be a highly focused company with a
leadership position in a growing industry," Mr. O'Dell said. "Our affiliation
with worldwide leader Sodexho Alliance is expected to create tremendous
synergies that will enhance our competitiveness and accelerate our growth. We
expect to realize annual pretax cost savings in excess of $60 million within a
three-year period, largely through greater purchasing economies, and elimination
of duplicate functions and facilities."
On a pro forma basis for fiscal year 1996 (ended Jan. 3, 1997), Sodexho Marriott
Services would have had sales of $4.0 billion. Total debt of the company
immediately following the spin-off is expected to be approximately $1.25
billion.
Sodexho Marriott Services will have approximately 100,000 employees, as well as
60,000 client employees managed by the company.
The New Marriott International
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"I am enthusiastic about the future growth prospects for the new Marriott
International," said William J. Shaw, president and chief operating officer.
"Marriott Lodging will continue to execute its global growth strategy by
adding properties across our 10 hotel brands, and developing new vacation club
resorts," Mr. Shaw elaborated. "We expect to add more than 140,000 rooms to
the Marriott lodging system over the next five years (1998-2002) through
management contracts, franchise agreements, selective company development and
acquisitions. We also will take advantage of opportunities in the rapidly
growing market for senior living services, by nearly tripling the number of
assisted living and full-service communities operated by Marriott over the next
five years. Finally, Marriott Distribution Services plans to open additional
facilities, and expects to gain market share in the limited line food service
distribution business."
On a pro forma basis for fiscal year 1996 (ended Jan. 3, 1997), assuming the
spin-off had occurred at the beginning of the year, the new Marriott
International would have had sales of $7.3 billion, operating profit of $508
million, net income of $297 million, and earnings per share of $2.16. Total debt
immediately after the spin-off is expected to be approximately $450 million. On
a pro forma basis, as of September 12, 1997, the company's operations would
include more than 1,450 lodging properties in the United States and 51 other
countries and territories, as well as 82 senior living communities and 15
distribution centers located throughout the United States, with a total of
140,000 employees.
Other Highlights of the Transactions
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The definitive agreement is subject to customary conditions, including approval
by Marriott International shareholders, receipt of a favorable ruling from the
Internal Revenue Service, and other regulatory approvals.
Sodexho Marriott Services and the new Marriott International will have separate
boards of directors. The Board of Directors of the new Marriott International
will consist of the 10 current Marriott International directors.
The two new companies will enter into agreements under which the new Marriott
International will distribute food and supplies to Sodexho Marriott Services,
and will provide various administrative and data processing services.
The rights to all Marriott trademarks and tradenames will be conveyed to the new
Marriott International, which will license certain Marriott tradenames used in
the management services business to Sodexho Marriott Services.
In a separate transaction, Sodexho Alliance will acquire Marriott's food service
and facilities management operations in the United Kingdom for approximately $50
million in cash.
Each outstanding zero-coupon convertible subordinated note (LYONs) of Marriott
International, Inc. would be convertible into 8.76 common shares of both the new
Marriott
International and Sodexho Marriott Services. The LYONs debt will be
assigned to the new Marriott International and, through an intercompany
agreement, Sodexho Marriott Services will assume a pro rata share of the debt
obligation based on the respective equity values of the two companies.
Merrill Lynch & Co. is acting as advisor to Marriott International, and Societe
Generale Securities Corporation is serving as advisor to Sodexho Alliance.
Company Profiles
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MARRIOTT INTERNATIONAL, INC. is the world's leading hospitality company with
over 4,900 operating units in the United States and 51 other countries and
territories. Major businesses include hotels operated and franchised under the
Marriott, Ritz-Carlton, Courtyard, Residence Inn, Fairfield, TownePlace Suites,
Renaissance, New World and Ramada International brands; vacation club
(timeshare) resorts; food service and facilities management for clients in
business, education and health care; senior living communities and services;
and, food service distribution. Total sales for fiscal year 1996 were $10.2
billion. The company is headquartered in Washington, D.C. and has approximately
230,000 employees.
SODEXHO ALLIANCE and its affiliates provide food and other contract services in
more than 60 countries around the world. The Group provides catering for over
13,500 businesses, hospitals, schools and prisons, as well as facilities design
and construction, building and grounds maintenance, housekeeping and other
services. Its businesses also provide food service, child care, housekeeping and
maintenance services in remote corporate living areas throughout the world, and
operate river cruises, sports clubs and theme restaurant chains. Sales for the
Group in fiscal year 1995/96 totaled Fr. francs 26.7 billion (U.S. $5.3
billion).
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Note: This press release contains "forward-looking statements" within the
meaning of federal securities law, including statements concerning synergies and
cost savings anticipated from the transaction, the number of lodging properties
and senior living communities expected to be added in future years, business
strategies and their intended results, and similar statements concerning
anticipated future events and expectations that are not historical facts. The
forward-looking statements in this press release are subject to numerous risks
and uncertainties, including the effects of economic conditions; changes in
supply and demand for hotel rooms, vacation club resorts and senior living
accommodations; competitive conditions in the lodging, management services and
other contract services industries; relationships with clients and property
owners; the impact of government regulations; and, the availability of capital
to finance growth, which could cause actual results to differ materially from
those expressed in or implied by the statements herein.
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Marriott International contacts: Nick Hill 301-380-7484
Tom Marder (Pager) 800-408-9143