In what would be the largest in a series of corporate travel acquisitions, The Blackstone Group late Tuesday announced an agreement to purchase Hilton Hotels Corp., pending shareholder approval. The companies expect the deal to close in the fourth quarter and value it at $26 billion, including assumption of debt.
Hilton's board of directors approved the deal Tuesday. Blackstone, which already owns more than 100,000 hotel rooms in the United States and Europe following a string of acquisitions in recent years, including Wyndham International, MeriStar Hospitality and several extended stay brands, in a release said Hilton is an "important strategic investment" and that "no significant divestitures are envisaged as a result of this transaction."
"This transaction is about building the premier global hospitality business," said Blackstone senior managing director Jonathan Gray. "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."
Hilton, like all major hotel chains, has posted consistently strong financial results since 2004, riding a wave of demand and keeping corporate room rates on the rise. The 2,800-property chain in late 2005 became much larger and more global with the $5.5 billion purchase of the lodging assets of its European namesake, Hilton Group plc
(BTN, Jan. 23, 2006).
"Our priority has always been to maximize shareholder value," said Hilton CEO Stephen Bollenbach in a release. "Our board of directors concluded that this transaction provides compelling value for our shareholders with a significant premium. We are delighted that a company with the resources and reputation of Blackstone fully appreciates the value inherent in our global presence, strong brands, industry-leading marketing and technology programs and unique portfolio of hotel properties."
Hilton in May said president and COO Matthew Hart will succeed Bollenbach, who plans to retire at year-end, as CEO at the beginning of next year
(BTNonline, May 24). Though the announcement of the deal did not address any aspects of management, the Associated Press late Wednesday quoted Bollenbach as saying, "Blackstone likes the management here," and "Matt continues to be COO and our plans remain the same."
Blackstone's acquisition spree has not been restricted to hotels. The private equity firm one year ago purchased Travelport, parent of the Orbitz online travel management company and the Galileo global distribution system, from Cendant for $4.3 billion
(BTNonline, June 30, 2006).