Marriott Spins Off Unit To Concentrate On Hotels

<B> Marriott Spins Off Unit To Concentrate On Hotels</B>

By Maria P. Vallejo

Marriott International is expected to pull off its planned spin-off at tomorrow's shareholder meeting against the wishes of some shareholders who believe the plan primarily will benefit the Marriott family.

The restructuring will split the international company into Marriott International Inc. and Sodexho Marriott Services Inc. The new Marriott International entity will hold the hotel, time-sharing and senior-living businesses, while the other organization will hold the food and facilities management services.

The transaction will give Marriott International the investment capacity to grow its hospitality business. Marriott plans to add more than 140,000 rooms to its portfolio within the next five years. The hotel chain recently was a contender for acquiring Inter-Continental Hotels & Resorts, which was purchased by Holiday Hospitality owner Bass PLC.

Shareholders are not opposed to the spin-off itself, but rather the agreement accompanying the plan's approval.

Supposedly as a means of implementing a poison pill tactic, the split approval will result in the installation of "super-voting" stock rights. This bundled voting technique will leave some shareholders with one vote per share and others with ten votes per share. Essentially this means that the voting process would allow the Marriott family, which owns about 20 percent of the company's stock, to sell off half of its shares while still retaining equal voting power.

Shareholders who are against the voting process are asking the company to unbundle the spin-off proposal from the super-voting stock proposition. Indeed, some shareholders even have gone so far as to create a Web page specifically geared towards eliminating the weighted voting process.

Marriott officials could not be reached for comment at press time.

Prior to the spin-off, Marriott will initiate a stock buy back of up to $720 million, accounting for the outstanding public debt of the company and its subsidiaries. It also will repay all of its outstanding commercial paper, $683 million as of Sept. 26, through a bank revolving credit facility of $1.5 billion.

Sodexho Marriott Services Inc., meanwhile, will maintain the Marriott's non-hotel businesses.

Sodexho Alliances, based in Montigny-Le-Bretonneux, France, will combine its North American operations with Marriott. The converted company will be the largest provider of food and facilities management services in North America. The merger with Sodexho will give the French company an instant U.S. presence.