updated 11/14/2005 9:34:02 AM ET 2005-11-14T14:34:02

Host Marriott Corp., one of the largest U.S. hotel real estate investment trusts, said Monday it agreed to buy 38 luxury and upscale hotels from Starwood Hotels & Resorts Worldwide Inc. for about $3.3 billion, adding a slew of new brands to the company's portfolio and expanding its international reach.

Host Marriott, most of whose hotels fall under the Marriott and Ritz-Carlton brands, said the deal with Starwood includes 25 U.S. hotels and 13 outside the country under the Westin, Sheraton, W Hotels, Luxury Collection and St. Regis brands.

Under the deal, Host Marriott expects to issue $2.3 billion in stock and pay the rest of the purchase price in cash. All told, Starwood's shareholders stand to get $11.18 for each share of class B stock they own. Starwood itself will get $941 million  in cash.

Host Marriott will also assume about $700 million in debt from Starwood as part of the deal.

The companies aim to close the deal in the first quarter of 2006.

Host Marriott said the deal would make it the largest lodging company in the U.S. and the sixth-largest public REIT with an enterprise value of about $16 billion.

For Starwood, which will continue managing the hotels for up to 40 years as part of the agreement, the deal speeds up its transformation from a real estate company with some hotel brands to a "consumer lifestyle company" with a branded hotel portfolio at its core, it said.

If approved, the deal would expand Host Marriott's reach into six new international markets, with six hotels located in Europe, three in Canada and additional ones in Fiji and Chile. Overall, it would give the company a total of 145 upscale and luxury hotels under 17 brands and in nine countries.

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