M&A

2 November, 2009

UPDATE 2-Starwood sells Bliss spas to Steiner for $100 mln

* Starwood sells Bliss spas to Steiner Leisure

* Bliss to remain at W hotels, Remede at St. Regis

* Starwood shares dip 1.7 pct, Steiner rises 1.1 pct (Recasts; updates with analyst comment, background, shares)

NEW YORK, Nov 2 (Reuters) - Starwood Hotels & Resorts Worldwide Inc (HOT.N) said on Monday it is selling its Bliss spa and product company for $100 million to Steiner Leisure Limited (STNR.O) as it shifts focus to its hotel business.

The sale of the unit is expected to close in the fourth quarter, Starwood said in a release. Bliss spas will remain at W hotel chains, while the Remede spa will be available at St. Regis hotels.

"This sale is illustrative of our long-term strategy to focus purely on our growing and increasingly global hospitality business," Chief Executive Frits van Paasschen said in a statement.

Starwood bought Bliss from LVMH Moet Hennessy Louis Vuitton in 2004 for $25 million to roll out at its W hotel chain.

The hotel operator can use the sale of this asset to lower debt or invest in its hotels, said Susquehanna analyst Robert LaFleur in a note.

In its recent third-quarter earnings report, Starwood indicated that it saw a slow recovery for the hotel industry. It sees revenue per available room, or RevPAR, a key measure of health in the industry, as flat or down 5 percent in 2010.

Starwood dropped its dividend 78 percent to 20 cents Monday. [ID:N02433739]

Steiner's purchase of the business will be funded from existing cash and through borrowings under a new credit facility, the Nassau, Bahamas-based company said.

In a statement, Steiner, a provider of spa services for cruise ships and resorts, said it expects the acquisition to help boost earnings in 2010.

Shares of Starwood fell 48 cents to $28.58 on the New York Stock Exchange. Steiner shares were up 30 cents to $37.26 on the Nasdaq. (Reporting by Deepa Seetharaman; Editing by Tim Dobbyn and Steve Orlofsky)

Source: http://www.reuters.com