Case Analysis of Marriot CorporationSuggestion: Yes, the idea of ​​dividing MC into two companies that separate the real estate properties from the company's service operations is cost-effective and value-adding (exhibit 1), should therefore be recommended to the MC board of directors. Since the plan is initiated by distributing the same shares of special stock dividends to the original shareholders of MC, the shareholders of MC would be exempt from tax for these special dividends they received, because at the same time the company enjoys a lower WACC and a higher dividend payout (Exhibit 1). ). Additionally, the spin-off strategy increases MC's ability to raise funds cheaply in the capital markets through Marriott International Inc. By splitting MII, MC expects to see MII with a higher time interest of 10.4 and a better (higher) financial structure (e.g., quick ratio and lower debt-to-equity ratio) would be rated as "high quality" by S&P and Moody's in the market (e.g. Aa for Moody's and AA for S&P). As a result, MII could raise capital/funds more easily and at a lower rate than MC (assuming the revolving loan in Exhibit 1 could decrease by 1%). Upgrading the rating would also resolve MC's current constraints and limitations in raising funds from the capital market. According to the plan, the new fund raised would be used to expand the company's hotel business by purchasing the assets of. competitors in financial difficulty. However, we do not believe that this expansion business plan would be accepted by most creditors without appropriate messaging to the capital market. Because most of the original creditors of MC's bonds were institutional holders who had suffered from the collapse of the junk bond and real estate markets and who might also be forced to sell their holdings of MC's bonds to a extremely low price at the time the MC plan is implemented (MC bond would be downgraded to non-investment grade due to deterioration of financial structure). Therefore, most institutional creditors in the market would have no intention of lending money to the MII due to the poor reputation resulting from the plan. Additionally, without an "event clause" in MC's bond contracts, other bondholders fear that this new plan could also result in significant losses for them in the form of a price reduction of the bond market. Therefore, we believe that even if MC is not limited to the "event pact", it must convince institutional creditors and other bondholders that the creation of a new entity "MII" is not a simple wealth transfer process, but a value-added financial strategy on separating real estate ownership from service management.