Marriott Corp.: Restructuring (HBS Case  9-294-090)

This case study deals with a company facing a strategic choice: the decision of whether to split Marriott Corp. into two companies -- Marriott International and Host Marriott.

Marriott Corp. has run into problems owing to the decline in real estate valuation. Marriott, at the time of the case, has a significant percentage of assets in hotels it had planned to sell. The problem made it difficult for Marriott to pursue growth strategies. Furthermore, the market price of the company had declined significantly. The reorganization proposed in the case was meant to deal with these problems.

• Will this type of reorganization meaningfully improve the company?
• What are the different way of effecting divestitures? In the Marriott case, are there alternative approaches that could be more desirable?
• Draw up a spreadsheet comparing the before-and-after capital structure of Marriott and its proposed component parts.
  
• How are bondholders affected? How can they protect their interests?
• Please make a recommendation, and justify it.