US merger creates new hotel giant

FelCor Lodging trust, a Texan hotel investor, has agreed to buy the MeriStar hospitality corporation in a $2.7b (£1.9b) deal creating one of the largest hotel owners in the world

In the US and Canada, MeriStar owns 113 luxury hotels, including the Hilton and Sheraton brands, while FelCor owns 186 hotels, including Embassy Suites, Crowne Plaza, Holiday Inn, Doubletree and Westin hotels.

The merged companies would have 299 hotels and revenue of $2.9b (£2b).

Thomas Corcoran, president and CEO of FelCor said that combining the two companies would create "a powerful platform for continued growth and value enhancement."

Under the terms of the deal, MeriStar shareholders would get $4.60 (£3.23) per share in cash and 0.784 FelCor shares. FelCor would also take on MeriStar's $1.6b (£1.12b) debt.

Management of 111 hotels would stay in the hands of MeriStar.

The merger is subject to shareholders' approval and is expected to be finalised by August.