a record acquisition for the global hotel industry, US
private equity firm Blackstone Group LP, has bought out
the Hilton Hotels Corp, for about $26-billion in cash.
Hilton''s 2006 net income was $572 million on revenue of
will pay $47.50 for each Hilton share, a 32-per cent premium
over Tuesday''s closing price. The PE firm is not revealing
the debt and equity portion of the deal at this stage.
Stearns, Bank of America Corp., Deutsche Bank AG, Morgan
Stanley and Goldman, all of which served as financial
advisers to Blackstone, provided financing pledges for
the Hilton deal.
Hilton is the world''s largest hotel group by number of
properties, though the Intercontinental Hotels Group is
the larger in terms of the number of rooms. In the US
Hilton is the second largest hotel chain after Marriott
deal comes two years after Hilton Hotels Corporation merged
with Hilton International, its sister company in the UK,
in a $6-billion deal that split off Ladbrokes, the UK
bookmaker, into a stand-alone company.
brands include Hilton, Conrad Hotels & Resorts, Doubletree,
Embassy Suites, Hampton Inn, Hilton Garden Inn, Hilton
Grand Vacations, Homewood Suites by Hilton, and The Waldorf-Astoria
Barron Hilton, the son of founder Conrad Hilton and co-chairman
of the Beverly Hills, California-based company, will get
$990 million for his 20.8 million shares. According to
Forbes magazine Barron Hilton, the father of celebrity
sisters Paris and Nicky Hilton, is worth $1.3 billion.
already has a significant portfolio of hotel and resort
properties, which includes more than 100,000 hotel rooms
in the United States and Europe.
acquisition gives Blackstone, whose 2,800 hotels include
brands such as Hilton, Doubletree, Embassy Suites, Hampton
Inn, Homewood Suites and The Waldorf-Astoria Collection,
the 575-hotels La Quinta Inns and LXR Luxury Resorts and
Hotels, just under 500,000 hotel rooms, 60,000 rooms behind
Intercontinental Hotels Group.
April Blackstone had sold Extended Stay America, a budget
business hotel chain, to Lightstone, a real estate investment
group, for $8 billion.
which raised $4.1-billion in an initial public offering
in late June (See: Blackstone
float raises $4.13 billion), said it intends to
invest in the Hilton properties and brands globally to
enhance and increase the business. The PE firm said that
it expected no significant divestitures as a result of
has announced plans to open 1,000 more hotels outside
North America in the next 10 years, as global demand continues
to outstrip supply.
in 1919 with a single property in Cisco, Texas, by Conrad
Hilton, the group will be taken private, ending more than
its 60 years as a public company.
first hotel with the Hilton name opened in 1925 in Dallas.
The company went public in 1946, and purchased New York''s
luxury Waldorf-Astoria hotel in 1949.
1964, it spun off the UK-based Hilton International, and
then reunited with it last year by buying the hospitality
unit of UK-based Hilton Group Plc for $5.71 billion. (See:
to sell hotels business to sister company in the US)
hotel industry has been in the midst of a multi-year boom
as demand has out stripped supply due to limited construction
of new hotels and allowed hoteliers to steadily raise
rates, making hospitality assets a much sought after commodity.
Hotel deals have quickened even faster this year compared
with last year''s $70 billion-plus estimated by International
leisure property investors, Jones Lang LaSalle Hotels.
research firm Private Equity Intelligence Ltd reported
that over 100 real estate funds expect to raise a record
$69 billion this year. In June Morgan Stanley raised $8
billion for the largest high-return real estate fund and
Goldman Sachs Group Inc. gathered $4 billion for a similar
fund. Blackstone has raised more than $7 billion for a
fund that''s slated to top Morgan Stanley''s when it closes
later this year, with about $10 billion of capital commitments.