Blackstone Denies Hilton Breakup

Back in August 2007, I wrote:

If you want my considered opinion about the Blackstone acquisition of Hilton, just remember that private equity investors buy and sell companies usually with other people’s money… Some of these equity firms “rip, strip and flip.”  Look at the Hilton family brands one year from now to see which have been sold and discarded.

A recent Sunday story in The Independent of London said that the Blackstone Group was considering breaking up Hilton, among other options, to realize value from the group ahead of debt repayment deadlines three and four years away.  Blackstone bought Hilton in July 2007.  The transaction was financed with $20.6 billion of debt and $5.7 billon of equity.

Reports said several options are being explored by Blackstone.  The private equity house is said to be looking at options to alter Hilton’s capital structure, such as a debt-for-equity swap, as well as a trade sale of some of its hotels to rivals.

Since the acquisition, Blackstone is believed to have written down the value of its holding by close to 50%. 

About the author: Stanley Turkel, MHS, ISHC operates his hotel consulting office as a sole practitioner specializing in franchising issues, asset management and litigation support services.  Turkel’s clients are hotel owners and franchisees, investors and lending institutions.  Turkel serves on the Board of Advisors and lectures at the NYU Tisch Center for Hospitality, Tourism and Sports Management.  He is a member of the prestigious International Society of Hospitality Consultants.  His provocative articles on various hotels subjects have been published in the Cornell Quarterly, Lodging Hospitality, Hotel Interactive, Hotel-Online, Blue MauMau, Hotel Resource News, etc. Don’t hesitate to call 917-628-8549 or email stanturkel@aol.com.

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