Global private equity firm the Blackstone Group has agreed to buy Hilton Hotels Corporation in an all-cash transaction for USD47.50 a share, a premium of 40 per cent over the closing price
Global private equity firm the Blackstone Group has agreed to buy Hilton Hotels Corporation in an all-cash transaction for USD47.50 a share, a premium of 40 per cent over the closing price on July 2 and valuing Hilton at some USD26bn billion.
The all-cash deal, which being conducted on behalf of Blackstone’s real estate and corporate private equity funds, is expected to be completed during the fourth quarter of this year, subject to the agreement of Hilton’s shareholders at a special meeting to be scheduled at a later date.
The acquisition brings together Hilton’s various hotel brands, comprising Hilton, Conrad Hotels & Resorts, Doubletree, Embassy Suites, Hampton Inn, Hilton Garden Inn, Hilton Grand Vacations, Homewood Suites by Hilton and the Waldorf-Astoria Collection with Blackstone’s own portfolio of hotels and resorts. The group owns more than 2,800 hotels comprising 480,000 rooms in 76 countries and territories, and employs around 100,000 people worldwide.
The private equity firm currently owns properties comprising more than 100,000 hotel rooms in the US and Europe, ranging from limited service properties such as La Quinta Inns and Suites to LXR Luxury Resorts and Hotels. The latter group includes upscale properties including Boulders Resort and Spa in Arizona, El Conquistador Resort in Puerto Rico, Boca Raton Resort and Club in Florida, the Golden Door Spa in San Diego, and the London NYC in New York.
Blackstone says it plans to invest in the Hilton properties and brands globally to enhance and grow the business for the benefit of owners, franchisees and customers. The firm insists it views Hilton as an important strategic investment and no significant divestitures of Hilton assets are envisaged following the transaction.
Over the past 15 years, Blackstone says, it has been the largest private investor in hospitality worldwide, building a strong track record of reinvesting in its hotel properties. The firm says it has invested some USD1bn in redevelopment capital in its LXR properties over the past three years and has expanded the La Quinta brand by approximately 45 per cent since its acquisition in January 2006.
‘Our priority has always been to maximise shareholder value,’ says Hilton co-chairman and chief executive Stephen F. Bollenbach. ‘Our board of directors concluded that this transaction provides compelling value for our shareholders with a significant premium. We are delighted that a company with the resources and reputation of Blackstone fully appreciates the value inherent in our global presence, strong brands, industry leading marketing and technology programs, and unique portfolio of hotel properties.’
Blackstone senior managing director Jonathan Gray comments: ‘It is hard to imagine a better strategic fit for us than Hilton, with its world-class people, brands and network of hotels. This transaction is about building the premier global hospitality business. We are committed to investing in the company and working with Hilton’s owners and franchisees to continue to grow and enhance the business.’
His colleague Michael Chae adds: ‘Blackstone’s real estate and corporate private equity funds collaborated on the acquisition of Hilton, demonstrating Blackstone’s unique ability to undertake such a transaction.’
Blackstone says the transaction is not contingent on the receipt of financing, with commitments already provided by Bear Stearns, Bank of America, Deutsche Bank, Morgan Stanley and Goldman Sachs, which also acted as the firm’s financial advisors. Simpson Thacher & Bartlett was legal advisor to Blackstone, while UBS Investment Bank and Moelis Advisors were financial advisors to Hilton and Sullivan & Cromwell acted as its legal advisor.
The Blackstone Group is a leading global alternative asset manager and provider of financial advisory services. Its alternative asset management businesses include the management of corporate private equity funds, real estate opportunity funds, funds of hedge funds, mezzanine funds, senior debt funds, proprietary hedge funds and closed-end mutual funds. The Blackstone Group also provides various financial advisory services, including mergers and acquisitions advisory, restructuring and reorganization advisory and fund placement services.
