Posted at 9:23 a.m., Thursday, July 5, 2007
Hilton shares soar after takeover offer from Blackstone
Advertiser Staff
Shares of Hilton Hotels Corp. soared 26 percent in early trading today, two days after the company agreed to be bought by The Blackstone Group for $20.1 billion in cash.Hilton operates the Hilton Hawaiian Village and other resorts in Hawai'i.
Hilton's shares were among the most heavily traded on the New York Stock Exchange. Shares rose $9.45 to $45.51.
The proposed acquisition deal represents a 32 percent premium over Tuesday's closing price. It would instantly make Blackstone the world's largest hotel owner.
The deal was valued at $26 billion including debt.
Shares of other lodging companies also were on the rise as analysts speculated which ones might become the next buyout target.
Shares of Starwood Hotels & Resorts Worldwide Inc., which operates the Sheraton and St. Regis chains, rose $4.91, or 7.1 percent to $74.04, while shares of Marriott International Inc. rose $3.22, or 7.2 percent to $47.68.
On the budget lodging end of the spectrum, Choice Hotels International Inc., with brands that include Comfort Inn and Econo Lodge, saw shares rise $3.19, or 8 percent, to $42.87.
More details of the takeover bid targeting Hilton were released today, including that Hilton would have to pay Blackstone a breakup fee of $560 million if it decides to accept a sweeter offer.
Hilton would also be required to allow Blackstone to beat any competing bid before accepting another offer, according to a proxy statement filed with the Securities and Exchange Commission.
Blackstone agreed to pay Hilton a breakup fee of $660 million if it is unable to produce financing for the deal — an unlikely scenario given that the $26 billion is coming from two of Blackstone's investment funds.
Tuesday, Blackstone, fresh off a $4.1 billion initial public offering, offered to buy all outstanding Hilton shares for $47.50 each. Hilton's board approved the deal, which the companies said they expected to close in the fourth quarter, pending shareholder and regulatory approval.
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 the United States and Europe, including La Quinta Inns and Suites as well as LXR Luxury Resorts and Hotels.
Hilton Hotels owns or operates 2,800 hotels and 480,000 rooms in 76 countries and territories and includes such brands as 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.
