Blackstone to Buy Hilton Hotels for $20B

Hilton Hotels Corp. has agreed to an all-cash buyout from The Blackstone Group LP in a $20.1 billion deal that would instantly make Blackstone the world's largest hotel owner.The private equity group said it would combine cash from its real estate and corporate private equity funds to buy all outstanding Hilton shares for $47.50 each, a 32 percent premium over Tuesday's closing stock price.The companies valued the deal at $26 billion including debt.Hilton's board approved the terms Tuesday. The company said the deal would close in the fourth quarter pending shareholder approval."Our board of directors concluded that this transaction provides compelling value for our shareholders with a significant premium," Stephen F. Bollenbach, Hilton's co-chairman and chief executive, said in a statement.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. Blackstone noted that it had invested nearly $1 billion in its LXR properties over the last three years and has grown the La Quinta brand by approximately 45 percent since buying it in January 2006."It is hard to imagine a better strategic fit for us than Hilton with its world-class people, brands and network of hotels," said Jonathan Gray, senior managing director at Blackstone. "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 recently announced that Matthew J. Hart, the company's president and chief operating officer, would succeed Bollenbach as president and CEO effective Jan. 1, 2008. It was unclear whether Hart would remain with the company after the acquisition.