Blackstone to buy Hilton Hotels for $26bn

Private equity giant Blackstone Group will buy Hilton Hotels Corporation in an all-cash deal worth $26 billion (19 billion euros), one of the largest such takeovers ever, the hotel chain said. 

Under the terms of the agreement announced Tuesday, Blackstone will acquire all the outstanding common stock of Hilton for $47.50 per share. The price represents a premium of 40 percent over Monday’s closing stock price.

 

Hilton Hotels stock closed up 6.44 percent Tuesday on the New York Stock Exchange at $36.05.

 

Hilton’s Board of Directors approved the transaction Tuesday, which will be completed during the fourth quarter of 2007 subject to shareholder approval, the corporation said in a statement.

 

When completed, the merger will be one of the 10 biggest by an investment fund. The largest was announced Saturday by Canadian pension fund Private Capital, which is leading a group buying Canadian telecoms giant BCE (Bell Canada) for $48.5 billion.

 

Blackstone intends to invest in the Hilton properties and brands globally to enhance and grow the business for the benefit of owners, franchisees and customers, Hilton said. “Our priority has always been to maximize shareholder value. Our Board of Directors concluded that this transaction provides compelling value for our shareholders with a significant premium,” said Hilton co-chairman and chief executive officer Stephen Bollenbach.

 

“We are delighted that a company with the resources and reputation of Blackstone fully appreciates the value inherent in our global presence,” he added.

 

“This transaction is about building the premier global hospitality business,” Blackstone senior managing director Jonathan Gray said. “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,” Gray added.

 

The acquisition brings together a leading global hospitality company with Blackstone’s extensive portfolio of hotels and resorts, with more than 100,000 hotel rooms in the United States and Europe.

 

Blackstone said in a statement “no significant divestitures are envisaged as a result of this transaction.” Blackstone in January 2006 acquired La Quinta Inns and Suites, and also own LXR Luxury Resorts and Hotels.

 

Hilton’s family of brands include Hilton, Conrad Hotels amp; Resorts, Doubletree, Embassy Suites, Hampton Inn, Hilton Garden Inn, Hilton Grand Vacations, Homewood Suites by Hilton, and The Waldorf-Astoria Collection.

 

Blackstone launched its initial public offering (IPO) on June 22. At $4.13 billion, the partial IPO was one of the biggest in five years.

 

Blackstone’s step into the public limelight marked a sea change for an industry that had closely guarded its secrecy. Blackstone was previously a wholly private partnership and, as such under US laws, not subject to the same scrutiny as public corporations.

 

The IPO launch and the deal with Hilton Hotels mark a heady year for Blackstone. In February, it won a $39 billion contest to buy the largest US office management firm, Equity Office Properties Trust.