This story is from July 5, 2007

Blackstone to buy Hilton Hotels

TNN / Jul 5, 2007, 01:25 IST

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Hilton Hotels Corp has agreed to an all-cash buyout from Blackstone Group in a $20.1 billion deal that would make Blackstone the world's largest hotel owner.

LOS ANGELES: Hilton Hotels Corp has agreed to an all-cash buyout from Blackstone Group in a $20.1 billion deal that would make Blackstone the world's largest hotel owner.
The private equity group said it would combine cash from its real estate and corporate private equity funds to buy all outstanding Hilton shares for $47.50 each, a 32% premium over Tuesday's closing stock price.The companies valued the deal at $26 billion including debt.
Hilton's board approved the terms on Tuesday. 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 CEO, 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 US and Europe, including La Quinta Inns, Suites and LXR Luxury Resorts and Hotels.

Hilton Hotels owns or operates 2,800 hotels and 480,000 rooms in 76 countries and territories and including brands like Doubletree, Embassy Suites and Hampton Inn. Among Hilton's premier hotels is the Waldorf-Astoria in New York.
Blackstone said it intends to invest heavily in Hilton and does not foresee any significant divestitures. Blackstone noted that it had invested nearly $1 billion in its LXR properties over the last three years and has grown the La Quinta brand by approximately 45% since buying it in January 2006.

"It is hard to imagine a better strategic fit for us than Hilton with its world-class people, brands and network of hotels," said Jonathan Gray, senior MD at Blackstone. "We are committed to investing in the company and working with Hilton's owners and franchisees to continue to grow and enhance the business."
Hilton recently announced that Matthew J Hart, the company's president and COO, would succeed Bollenbach as president and CEO effective January 1, 2008. It was unclear whether Hart would remain with the company after the acquisition. "Blackstone likes the management here," Bollenbach said. "Matt continues to be COO and our plans remain same."
Hilton has been expanding since 2005, when it bought Britain's Hilton Group for $5.7 billion, reuniting two that split in the 1960s. The deal allowed Hilton, which had been limited to properties in the US and Canada, to become a global player. In 2006, Hilton's revenue nearly doubled to $8.16 billion, and net income climbed 24%.
The company had raised its 2007 estimates in a sign that its expansion plans were being matched by increased worldwide demand.

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