Blackstone acquires Hilton

Hilton Hotels Corporation has entered into a definitive merger agreement with The Blackstone Group’s real estate and corporate private equity funds in an all-cash transaction valued at approximately $26 billion. Under the terms of the agreement, Blackstone will acquire all the outstanding common stock of Hilton for $47.50 per share. The price represents a premium of 40% over yesterday’s closing stock price. Hilton’s Board of Directors approved the transaction today. It is anticipated that the transaction will close during the fourth quarter of 2007; completion is subject to the approval of Hilton’s shareholders, as well as other customary closing conditions. A special shareholders meeting will be scheduled at a later date. The acquisition brings together a leading global hospitality company with Blackstone’s extensive portfolio of hotels and resorts. Blackstone currently owns more than 100,000 hotel rooms in the U.S. and Europe, ranging from limited service properties such as La Quinta Inns and Suites to LXR Luxury Resorts and Hotels. The LXR collection includes such upscale properties as The Boulders Resort and Spa (Arizona), The El Conquistador Resort (Puerto Rico), The Boca Raton Resort and Club (Florida), The Golden Door Spa (San Diego), and The London NYC (New York). Blackstone’s holdings complement Hilton’s unparalleled family of brands, which include Hilton, Conrad Hotels & Resorts, Doubletree, Embassy Suites, Hampton Inn, Hilton Garden Inn, Hilton Grand Vacations, Homewood Suites by Hilton, and The Waldorf=Astoria Collection. Blackstone intends to invest in the Hilton properties and brands globally to enhance and grow the business for the benefit of owners, franchisees and customers. Over the last fifteen years, Blackstone has been the largest private investor in hospitality worldwide and it has a strong track record of reinvesting in its hotel properties. Blackstone has invested approximately $1 billion in redevelopment capital in its LXR properties over the last three years; it has also grown the La Quinta brand by approximately 45% since its acquisition in January 2006. Stephen F. Bollenbach, Hilton’s co-chairman and chief executive officer, said: “Our priority has always been to maximize shareholder value. 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.” Jonathan Gray, Senior Managing Director, Blackstone, commented, “It is hard to imagine a better strategic fit for us than Hilton with its world-class people, brands and network of hotels. 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.” Michael Chae, Senior Managing Director, Blackstone, added: “Blackstone’s real estate and corporate private equity funds collaborated on the acquisition of Hilton, demonstrating Blackstone’s unique ability to undertake such a transaction. We look forward to working with Hilton’s management team and employees to enhance the value of the company.” Blackstone views Hilton as an important strategic investment; no significant divestitures are envisaged as a result of this transaction. The transaction is not contingent on the receipt of financing. Financing commitments have been provided by Bear Stearns, Bank of America, Deutsche Bank, Morgan Stanley and Goldman Sachs. These institutions also served as financial advisors to Blackstone. Simpson Thacher & Bartlett LLP acted as legal advisor to Blackstone. UBS Investment Bank and Moelis Advisors acted as financial advisors to Hilton, and Sullivan & Cromwell LLP acted as legal advisor to Hilton.
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