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Hilton's purchase by Blackstone valued at $26B—in cash

BEVERLY HILLS Calif. Hilton Hotels Corp. said it has signed a definitive agreement to be acquired by The Blackstone Group in an all-cash transaction valued at $26 billion.

The acquisition would greatly bolster Blackstone's hotel portfolio, which already includes such showcase properties as The Boulders in Scottsdale, Ariz., the El Conquistador in Fajardo, Puerto Rico and The London in New York, which hosts Gordon Ramsay's namesake restaurant. The deal would bring into the fold at least nine additional hotel brands, including Doubletree, Embassy  Suites, The Waldorf-Astoria and Hilton's namesake chain. The Hilton brand generated systemwide food and beverage sales of $1.1 billion in 2006, placing it at number 43 on Nation's Restaurants News' Top 100 Chains ranking. Hilton Hotels Corp., based here, placed 35th on the Top 100 Companies ranking.

Hilton said the $47.50-a-share offer from Blackstone topped the stock's closing stock price on Monday by 40 percent. The buyout has been approved by the lodging company's board of directors, who estimated that the deal would close during the fourth quarter, pending approval by shareholders. The company agreed to pay a $560 million "break-up" fee to Blackstone if it should accept another offer or otherwise prevent the deal from being consummated.

 

The parties noted that the deal, one of the largest ever seen in the hospitality industry, is not subject to acquiring the needed financing. Blackstone, one of the world's largest and most active private equity funds, recently went public. It noted that the deal is being consummated through a collaboration of its real estate and what it now calls its "corporate private equity" funds, in reference to now being publicly owned. It is based in New York.

 

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