Marriott International Inc is ready to buy Starwood Hotels and Resorts for US$12.2 billion (AU$17.22 billion), a deal which would leave the world with the largest hotel chains across the globe.

Both the hotel groups agreed on the deal on Monday, surprising other big hotel chains that bid in the process such as Hyatt Hotels Corporation, InterContinental Hotels Group and a few Chinese companies.

According to the Wall Street Journal, the merging of Marriott and Starwood group would create the No. 1 hotel company in the world. The companies would operate over 5,500 hotel chains with a total of 1.1 million rooms across 100 countries.

The news of the deal came weeks after Starwood sold its time share business to Interval Leisure Group for US$1.3 billion (AU$1.84 billion), reported CNN Money.

Marriott Chief Executive Arne Sorenson said that the deal would make them "the world's favourite travel company.” The deal includes 19 brands of Marriott such as Fairfield Inn, Riz Carlton, and Starwood's Westin, W and St. Regis chains.

Just a few hours after the deal was announced on Monday, Starwood shares dropped 3.6 percent and closed at US$72.27 (AU$102.03), while Marriott witnessed a rise of 1.4 percent in shares, closing at US$73.72 (AU$104.07), reported BBC. It is seen that shareholders have reacted with some scepticism to the bid.

It has been also reported that Marriott will be paying Starwood US$11.9 billion (AU$16.80 billion) in stock and the rest in cash and both the companies expect to complete the transaction by mid-2016, indicating only 2.8 percent of the deal to be paid in cash.

Meanwhile, Starwood hotels had put itself up for sale on the market back in April 2015 after Chairman Bruce Duncan said the company was planning to make strategy shifts and explore financial alternatives.

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