Hilton Worldwide Holdings Inc. raised US $2.35 billion in a record initial public offering for a lodging company, reports Bloomberg.
The company and existing shareholders sold about 117.6 million shares for $20 each, according to a statement yesterday. The McLean, Virginia-based company had offered 112.8 million shares for $18 to $21 apiece.
Blackstone Group, owner of Hilton Worldwide since acquiring it for $26 billion six years ago, has taken advantage of U.S. stocks near highs and a rebound in the hotel market to take the company public. Since the New York-based private-equity firm purchased Hilton, the company has expanded its room count by a third, most of it outside the U.S. and in franchised and managed hotels, which require almost no capital investment.
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“Hilton has been focused on re-establishing its industry leader status,” Lukas Hartwich, lodging analyst at Green Street Advisors Inc., a Newport Beach, California-based research firm, said in a December 9 report. “Future growth has shifted to primarily non-U.S. markets.”
At the IPO price, Hilton will have a stock-market value of about $19.7 billion, based on the original terms in the prospectus, eclipsing Starwood Hotels & Resorts Worldwide Inc. (HOT), Marriott International Inc. and Hyatt Hotels Corp. The offering was more than nine times oversubscribed, according to a person with knowledge of the matter who asked not to be named.
Blackstone’s paper profit on the deal, once seen as a money-loser, ranks as the second-biggest ever among private-equity buyouts on a nominal basis.
Based on the roughly $6.5 billion that Blackstone and its investors put into Hilton, the valuation would give the firm an unrealized gain of $8.5 billion. If Hilton shares rise past $22.11, the firm’s paper profit would surpass the record $10.1 billion that Apollo Global Management LLC has reaped from its investment in chemicals producer LyondellBasell Industries NV.
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