April 29, 2015 / 11:57 AM / 4 years ago

UPDATE 2-Starwood Hotels exploring strategic alternatives; profit beats

* 1st-qtr adj earnings/shr $0.65 vs est $0.57

* Company retains Lazard to help explore options

* Shares rise as much as 8.7 pct to record high (Adds analysts’ comments, share move details, background)

By Radhika Rukmangadhan

April 29 (Reuters) - Starwood Hotels & Resorts Worldwide Inc reported a higher-than-expected quarterly profit and said it was exploring strategic and financial alternatives.

Shares of Starwood, which owns the St. Regis and Sheraton hotel brands, jumped as much as 8.7 percent to a record $87.80 on Wednesday morning.

Starwood, which said “no option is off the table” retained Lazard to assist in exploring alternatives.

“The mostly likely scenario is to put up the company for sale”, Stifel Nicolaus analyst Simon Yarmak said.

Larger rivals Hilton Worldwide Holdings Inc and InterContinental Hotels Group Plc as well as private equity and sovereign wealth funds would be potential buyers, Yarmak said.

Starwood, which had a market valuation of about $14 billion at Tuesday’s close, said it would not make any further public comment until the review was complete.

“The highest probability is that the company markets itself to a long-term ‘sticky’ buyer like a sovereign wealth fund out of a Middle Eastern country or potentially one or group of investors in emerging markets,” FBR Capital Markets & Co analyst Nikhil Bhalla said.

Starwood, which has been transitioning into an “asset-light” strategy, has sold properties worth about $1.5 billion over the past two years. The spin-off of Starwood’s timeshare business the latest in that plan.

In February, the company announced the resignation of long-time Chief Executive Frits van Paasschen.

Starwood said it expects a profit of $2.94-$3.04 per share for 2015, above analysts’ estimate of $2.97 per share.

Net income attributable to the company fell to $99 million, or 58 cents per share, in the first quarter ended March 31 from $137 million, or 72 cents per share.

Excluding items, the company earned 65 cents per share.

Revenue fell 2.9 pct to $1.42 billion. System-wide international occupancy at Starwood properties increased 2.3 percent.

Analysts on average expected a profit of 57 cents per share on revenue of $1.46 billion, according to Thomson Reuters I/B/E/S.

Hilton reported higher-than-expected quarterly revenue on Wednesday, helped by higher room rates and increased occupancy.

Starwood shares were up 7.2 percent at $86.59 on the New York Stock Exchange. Hilton shares rose 4.4 percent to $30.73. (Additional reporting by Rohit T. K. in Bengaluru; Editing by Joyjeet Das)

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