Hilton seeks $2.4 bn in hotel IPO
Hilton Worldwide Holdings Inc, the lodging chain bought by Blackstone Group LP (BX) in 2007, plans to raise as much as $2.4 billion in its US initial public offering, the most ever for a hotel company.
The McLean, Virginia-based hotel operator and existing shareholders plan to sell 112.8 million shares for $18 to $21 each, according to a regulatory filing today. Hilton, the world's largest hotel company with more than 4,000 properties, plans to sell 64.1 million of the total, using its proceeds to help repay $1.25 billion of debt. New York-based Blackstone isn't selling any of its stock.
Blackstone is taking Hilton public after the chain refinanced about $13 billion of debt, capitalising on U.S. stocks near records and a rebound in hotel occupancies and rates. In the past six years, Hilton Chief Executive Officer Christopher Nassetta increased the number of open rooms by 34 per cent, most of them overseas and in franchised and managed hotels, which require almost no capital investment. He also expanded the development pipeline and frequent-guest program.
"The things he talked about doing, he's delivered on," said Drew Babin, senior lodging analyst at CBRE Clarion Securities in Radnor, Pennsylvania. "Hilton has been doing these massive things under the radar."
About 11.5 per cent of Hilton is being sold in the IPO, and the company will have a market value of about $19.2 billion at the midpoint of the price range. That compares with about $14.3 billion for Starwood Hotels & Resorts Worldwide Inc and $14.1 billion for Marriott International Inc.
Hilton's IPO could raise as much as $2.7 billion if extra shares are sold to meet demand. That would make it the second-largest U.S. IPO this year, after Plains GP Holdings LP, an affiliate of an oil and gas pipeline company. It would surpass Hyatt Hotels Corp.'s $1.09 billion sale in November 2009 as the biggest lodging IPO, based on data compiled by Bloomberg.
Overseas growth potential and hotel-management expertise help make Hilton attractive to investors, said Arthur Adler, head of the Americas division of brokerage Jones Lang LaSalle Inc.'s hotels group.
The McLean, Virginia-based hotel operator and existing shareholders plan to sell 112.8 million shares for $18 to $21 each, according to a regulatory filing today. Hilton, the world's largest hotel company with more than 4,000 properties, plans to sell 64.1 million of the total, using its proceeds to help repay $1.25 billion of debt. New York-based Blackstone isn't selling any of its stock.
Blackstone is taking Hilton public after the chain refinanced about $13 billion of debt, capitalising on U.S. stocks near records and a rebound in hotel occupancies and rates. In the past six years, Hilton Chief Executive Officer Christopher Nassetta increased the number of open rooms by 34 per cent, most of them overseas and in franchised and managed hotels, which require almost no capital investment. He also expanded the development pipeline and frequent-guest program.
"The things he talked about doing, he's delivered on," said Drew Babin, senior lodging analyst at CBRE Clarion Securities in Radnor, Pennsylvania. "Hilton has been doing these massive things under the radar."
About 11.5 per cent of Hilton is being sold in the IPO, and the company will have a market value of about $19.2 billion at the midpoint of the price range. That compares with about $14.3 billion for Starwood Hotels & Resorts Worldwide Inc and $14.1 billion for Marriott International Inc.
Hilton's IPO could raise as much as $2.7 billion if extra shares are sold to meet demand. That would make it the second-largest U.S. IPO this year, after Plains GP Holdings LP, an affiliate of an oil and gas pipeline company. It would surpass Hyatt Hotels Corp.'s $1.09 billion sale in November 2009 as the biggest lodging IPO, based on data compiled by Bloomberg.
Overseas growth potential and hotel-management expertise help make Hilton attractive to investors, said Arthur Adler, head of the Americas division of brokerage Jones Lang LaSalle Inc.'s hotels group.
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First Published: Dec 03 2013 | 12:06 AM IST