PE firm Blackstone to buy Hilton for $26 billion

Hilton Hotels Corp. has agreed to be acquired by the US private equity firm
Blackstone Group in a deal valued at $26 billion.

The private equity group agreed to buy all outstanding Hilton shares for
$47.50 each, a 32 percent premium over Tuesday's closing price. That adds up to
$20.1 billion in cash; Blackstone also would assume about $6 billion in Hilton
debt.
   
Hilton's Board of Directors approved the transaction on Tuesday, which will be
completed sometime during the fourth quarter of 2007, subject to the approval of
Hilton's shareholders.
   
"Our priority has always been to maximise shareholder value. Our Board of
Directors concluded that this transaction provides compelling value for our
shareholders with a significant premium," said Stephen F. Bollenbach, Hilton's
co-Chairman and CEO. 
   
"This transaction is about building the premier global hospitality business.
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," said Jonathan Gray, Senior Managing Director of Blackstone.
   
The acquisition would boost Blackstone's portfolio of lodging properties.
Blackstone owns more than 100,000 hotel rooms in the US 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 includes the Doubletree, Embassy Suites and Hampton Inn brands.
   
Blackstone said it intends to invest heavily in Hilton and does not foresee
any significant divestitures.
   
Blackstone launched its initial public offering (IPO) on June 22. At $US4.13
billion, the partial IPO was one of the biggest in five years.
   
Many investors think the notoriously cyclical US hotel industry has more room
to grow and could provide risk-adjusted returns that outperform other asset
classes, according to Thomas Callahan, an analyst with hospitality industry
tracking firm PKF Consulting in San Francisco, as reported by Reuters.
   
"The perspective is that the industry still has a few more good years left in
this upturn that began -- depending on how you count it -- several years ago,"
Callahan reportedly said.