New York: The Blackstone Group announced on 3July that it would purchase Hilton Hotels for $26 billion (Rs1,05,040 crore), or $47.50 a share, a 40% premium over its closing price on 2July.
The deal, which includes the assumption of about $7.5 billion in debt, is Blackstone's largest deal since it bought Equity Office Properties Trust earlier this year. And although Blackstone could use its newly minted shares of stock to help finance the deal, the firm said it would pay for Hilton in cash.
Hilton, a famous consumer brand that also owns such storied hotels as the Waldorf Astoria, has been publicly traded for more than five decades.
The company, based in Beverly Hills, Calif., has announced plans for a significant international expansion, a move made possible by its purchase two years ago of the owner of the international rights to the Hilton brand.
Over the last few years, Hilton has expanded its franchise business and acquired companies like Promise Hotels. "We have tremendous growth opportunities in the United States and around the world," said Stephen F. Bollenbach, Hilton's co-chairman and chief executive, who announced his retirement before this deal.
Over the last three years, Blackstone has invested roughly $15 billion in hotel companies.
When the Hilton deal closes, Blackstone will own, manage or franchise the rights to 3,700 hotels representing about 600,000 rooms. Other Blackstone hotels include La Quinta Inns and Suites and a group of luxury hotels like the Boca Raton Resort and Club and the Boulders Resort and Spa in Arizona. In April, Blackstone sold Extended Stay Hotels, a budget hotel chain, for $8 billion.
Blackstone said it planned to invest in Hilton, integrating the company's brands -- which include Doubletree, Embassy Suites and Hampton Inn as well as Hilton -- with its other hotels.
There may be savings also in integrating back-office computer systems, and customers may benefit from a combined rewards programme among Blackstone-owned hotels.