Blackstone Hands Back Its Hilton Room Key
The formal announcement from Hilton Worldwide Holdings wasn’t especially momentous: the pricing on a sale of 15.8 million shares of the company’s stock by “certain selling stockholders affiliated with The Blackstone Group L.P.” However, it noted that following the close of the sale, “The Blackstone Group L.P. and its affiliated funds will no longer beneficially own any shares of Hilton’s common stock,” thus ending Blackstone’s 11-year ownership of Hilton.
Blackstone’s $26-billion leveraged buyout of Hilton occurred in 2007, at the height of the previous cycle, even as a few storm clouds had begun rolling in ahead of the global recession the following year. Within 18 months of Blackstone’s acquisition, Hilton’s global revenue had dropped by 20% and its EBITDA had declined by 40%.
“This was initially a very difficult investment, but [Hilton CEO] Chris [Nassetta] was a terrific leader,” said Jonathan Gray, president of Blackstone, in an interview with Bloomberg News this week. “The steep revenue declines could have easily dissuaded us, but the continued commitment of the entire firm paid off in a big way. We saw a ton of white space in Europe and China for this company, and our thesis held together through the crisis and that’s what gave us confidence.”
Long-term, Hilton proved to be one of Blackstone’s most successful investments. During Blackstone’s ownership of the McLean, VA-based hospitality giant, Hilton expanded its room count by almost double to 900,000, and launched a number of new brands.
It also went public in 2013, after which Blackstone began winding down its ownership. The final share sale was the 12th in a series of transactions since Blackstone began exiting its Hilton investment in 2014.
In the interim, Hilton spun off its owned real estate and its timeshare business into separate, publicly traded companies. It sold a 25% share of Hilton Worldwide stock to Chinese conglomerate HNA Holdings. Under financial pressure, HNA has since sold off its stake.
“Our motto for Blackstone real estate is buy it, fix it, sell it, and Hilton really fell into that as a company we felt we could transform,” Gray told Bloomberg.
For comments, questions or concerns, please contact Paul Bubny
- ◦Sale/Acquisition
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