Blackstone to buy Hilton
The deal takes Hilton private and quadruples Blackstone's portfolio of lodging properties
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Private equity firm Blackstone Group LP said yesterday it would purchase Hilton Hotels Corp. for $26 billion, or $47.50 a share, a 40 percent premium over its closing price on Monday.
The deal, which includes the assumption of about $7.5 billion in debt, is Blackstone's largest deal since it bought Equity Office Properties Trust earlier this year.
In Hawaii, Hilton properties include the Hilton Hawaiian Village Beach Resort & Spa, the Hilton Waikoloa Village, the Grand Wailea Resort Hotel and Spa, and the Embassy Suites Waikiki Beach Walk.
Cynthia Rankin, director of public relations for Hilton in Hawaii, said yesterday that Blackstone has indicated that "no significant divestitures are envisaged as a result of this transaction."
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By Gary Gentile / Associated Press
LOS ANGELES » Hilton Hotels Corp. said yesterday it has agreed to be acquired by Blackstone Group LP for $18.5 billion in cash.
The private equity group agreed to buy all outstanding Hilton shares for $47.50 each, a 32 percent premium over yesterday's closing stock price.
The companies valued the deal at $26 billion, including debt.
Hilton's board approved the terms yesterday. The company said the deal would close in the fourth quarter pending shareholder approval.
"Our board of directors concluded that this transaction provides compelling value for our shareholders with a significant premium," Stephen F. Bollenbach, Hilton's co-chairman and chief executive, said in a statement.
The acquisition would take Beverly Hills-based Hilton Hotels private and boost Blackstone's portfolio of lodging properties. Blackstone owns more than 100,000 hotel rooms in the United States and Europe, including La Quinta Inns and Suites as well as LXR Luxury Resorts and Hotels.
Hilton Hotels owns or operates 2,800 hotels and 480,000 rooms in 76 countries and territories and includes such brands as Doubletree, Embassy Suites and Hampton Inn.
Among Hilton's premier hotels is the Waldorf-Astoria in New York.
In Hawaii, Hilton properties and affiliates include: Hilton Grand Vacation Club at the Hilton Hawaiian Village, the Hilton Hawaiian Village Beach Resort & Spa, the Hilton Waikiki Prince Kuhio, the Hilton Kauai Beach Resort, the Hilton Grand Vacation Club at Waikoloa Beach Resort, the Hilton Waikoloa Village, the Grand Wailea Resort Hotel and Spa, the Hoolei at Grand Wailea, Embassy Suites Waikiki Beach Walk, the Doubletree Alana Waikiki.
Cynthia Rankin, director of public relations for Hilton in Hawaii, said yesterday that Blackstone has indicated that "no significant divestitures are envisaged as a result of this transaction."
Blackstone said it intends to invest heavily in Hilton.
"We are committed to investing in the company and working with Hilton's outstanding owners and franchisees to continue to grow and enhance the business," said Jonathan Gray, senior managing director at Blackstone.
Hilton recently announced that Matthew J. Hart, the company's president and chief operating officer, would succeed Bollenbach as president and CEO effective Jan. 1, 2008. It was unclear whether Hart would remain with the company after the acquisition.
"Blackstone likes the management here," Bollenbach told the Associated Press. "Matt continues to be COO and our plans remain the same."
Hilton has been aggressively expanding since 2005, when it bought Britain's Hilton Group PLC for $5.7 billion cash, reuniting two brands that split in the 1960s. The deal allowed Hilton, which had been limited to properties in the U.S. and Canada, to become a global player.
In 2006, Hilton's revenue nearly doubled to $8.16 billion, and net income climbed 24 percent.
The company had raised its 2007 estimates for per-room revenue, a key industry measure, in a sign that its expansion plans were being matched by increased worldwide demand.
The deal was praised by hotel workers union Unite Here.
"We enjoy a positive partnership with Hilton Hotels," union president Bruce Raynor said.
"Blackstone has demonstrated its commitment to fair treatment for thousands of hotel workers in several major markets," he added. "This combination is good news for the workers of what will be the largest hotel owner in the world."
Socialite Paris Hilton's grandfather, Barron Hilton, is co-chairman of the board with Bollenbach and owns 5.3 percent of Hilton Hotels' outstanding shares, according to the company's latest proxy statement.
The stake consists of 20.8 million shares owned by the William B. Hilton Trust, of which Barron Hilton is a trustee, according to the proxy.