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25 Percent Stake in Hilton for $6.5 Billion to be Bought by China's HNA


10/24/2016


25 Percent Stake in Hilton for $6.5 Billion to be Bought by China's HNA
About 25 percent of hotel operator and manager Hilton Worldwide Holdings Inc would be bought over by Chinese aviation and shipping conglomerate HNA Group.
 
The Chinese company said this on Monday.
 
The Chinese company would buy the shares from Blackstone Group LP which is the biggest shareholder of Hilton Worldwide Holdings Inc for a sum that was pegged at $6.5 billion.
 
Following the announcement by the Chinese company, there was a rise of as much as 3.71 percent to reach $23.76 in early trading for the shares of Hilton, whose brands include Conrad Hotels & Resorts, Curio and Double Tree as well as Hilton.
 
Following the offer bid, the valuation of Hilton was pegged at about $26 billion after HNA Group said that it would buy the stake for $26.25 per share which represents a premium of 14.6 percent to Hilton's closing price on Friday.
 
Including debt, in 2007, Blackstone took Hilton private for $26.7 billion. In what was then the biggest-ever hotel IPO, the private equity firm listed the hotel company in 2013 amid huge fanfare.
 
On the other hand, just this year alone, this deal would note the HNA Group's second investment in the U.S. hospitality industry.
 
For a sum that has not yet been disclosed, Carlson Hotels Inc, the owner of the Radisson hotel chain, and in addition to its 51.3 percent majority stake in Rezidor Hotel Group AB, was agreed to be bought by the Chinese company in April this year.
 
To counter and sidestep slowing growth in the Chinese economy, a number of Chinese companies have been splurging on foreign acquisitions. Compared to the total valuations of the mergers and acquisitions that were done by Chinese companies last year, this year till now, the overseas mergers and acquisitions by Chinese companies have touched about 70 percent more than the whole of last year, marking a record value of $181 billion so far.
 
In a deal that will create the world's third-largest lessor, HNA Group's Avolon Holdings agreed earlier this month to buy CIT Group's aircraft leasing assets worth $10 billion.
 
However, earlier this year, following a bidding war with Marriott International Inc., the pursuit of Starwood Hotels & Resorts Worldwide was abandoned by Chinese insurer Anbang Insurance Group Co, which bought the iconic Waldorf Astoria in New York in 2015.
 
The biggest hotel chain was created after Marriott completed the acquisition of Starwood in September. Following the expected separation of Hilton's real estate and timeshare businesses by the end of 2016, these two business segments will have about 25 percent owned by the HNA Group, the company said in the announcement on Monday.
 
Appointment of two directors to Hilton's board would be doe after the completion of the deal which will raise the number of board members to 10. Including Jonathan Gray who will remain as chairman, Blackstone will continue to have two seats on Hilton's board.
 
While JPMorgan advised HNA, Evercore was the financial adviser to Hilton.
 
Compared with the 1.5 percent decline in the Dow Jones U.S. Travel & Leisure index, Hilton's stock had risen about 7 percent this year up to Friday's close.
 
(Source:www.reuters.com)