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Marriott Corporation split into two companies: Host Marriott

BYP11-4 Marriott Corporation split into two companies: Host Marriott Corporation
and Marriott International. Host Marriott retained ownership of the corporation's vast
hotel and other properties, while Marriott International, rather than owning hotels,
managed them. The purpose of this split was to free Marriott International from the
"baggage" associated with Host Marriott, thus allowing it to be more aggressive in its
pursuit of growth. The following information (in millions) is provided for each
corporation for their first full year operating as independent companies.

Host Marriott Marriott International
Sales $1,501 $8,415
Net income (25) 200
Total assets 3,822 3,207
Total liabilities 3,112 2,440
Stockholders' equity 710 767

Instructions

(a) The two companies were split by the issuance of shares of Marriott International to all shareholders of the previous combined company. Discuss the nature of this transaction.

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INTERPRETING FINANCIAL STATEMENTS

BYP11-4 Marriott Corporation split into two companies: Host Marriott Corporation
and Marriott International. Host Marriott retained ownership of the corporation's vast
hotel and other properties, while Marriott International, rather than owning hotels,
managed them. The purpose of this split was to free Marriott International from the
"baggage" associated with Host Marriott, thus ...

Solution Summary

Marriott Corporation split into two companies: Host Marriott Corporation
and Marriott International. Host Marriott retained ownership of the corporation's vast
hotel and other properties, while Marriott International, rather than owning hotels,
managed them. The purpose of this split was to free Marriott International from the
"baggage" associated with Host Marriott, thus allowing it to be more aggressive in its
pursuit of growth. The following information (in millions) is provided for each
corporation for their first full year operating as independent companies.

Host Marriott Marriott International
Sales $1,501 $8,415
Net income (25) 200
Total assets 3,822 3,207
Total liabilities 3,112 2,440
Stockholders' equity 710 767

Instructions

(a) The two companies were split by the issuance of shares of Marriott International to all shareholders of the previous combined company. Discuss the nature of this transaction.

$2.19