HNA Group to buy about 25% in Hilton from Blackstone Group for $6.5 bn

Chinese conglomerate HNA Group yesterday struck a deal to buy around 25 per cent in Hilton Worldwide Holdings Inc from private equity firm Blackstone Group for $6.5 billion.

Blackstone, the world's largest private equity firm, is the biggest shareholder in Hilton, holding about 46-per cent stake.

The deal comes five months after the Beijing-based company acquired Radisson and Country Inns & Suites hotel chain owner Carlson Rezidor Hotel Group, for an undisclosed sum (See: China's HNA Group to buy Carlson Hotels).

HNA, controlled by Chen Feng, will pay $26.25 a share in cash, or 15 per cent more than Hilton's Friday closing price.

The transaction will reduce Blackstone's stake in Hilton to about 21 per cent, and following Hilton's previously announced spin-offs of Park Hotels & Resorts and Hilton Grand Vacations, which are expected to occur on or about the end of the year, HNA will own approximately 25 per cent of all three companies.

The deal will give HNA two board seats in Hilton, while Blackstone will continue to have two seats.

HNA has agreed to not sell its stake in Hilton for a two-year period, but can acquire more than 25 per cent with Hilton's consent.

''We are pleased to welcome HNA Group as a long-term investor and strategic partner,'' said Christopher Nassetta, president and CEO of Hilton.

''We believe this mutually beneficial relationship will open new opportunities for our brands and guests around the world, particularly in light of HNA's strong position in the fast-growing Chinese travel and tourism market, the largest outbound travel and tourism market in the world,'' he added.

''Hilton is an iconic global hospitality company with an unmatched portfolio of high-quality brands and a reputation for operational excellence,'' said Adam Tan, vice chairman and CEO of HNA Group.

''This investment is consistent with our strategy to enhance our global tourism business, and we look forward to working together on new initiatives that leverage our respective strengths, expertise and tourism platforms to provide travelers more choice, value and world-class services,'' he added.

Hilton Hotels, the crown jewel in Blackstone Group's investment portfolio, was acquired by the equity firm in July 2007 for about $26-billion in cash. ( Blackstone acquires Hilton Hotels for $26 billion)

But barely six months into the acquisition, the global hotel industry went into a downward spin reeling first from the global financial crisis and later from the recession.

Hilton went public in December 2013 in a record IPO for a hotel company, raising more than $2.35 billion.  Last May, Blackstone cut its stake in Hiltons to 46 per cent by selling shares in order to raise money to reduce debt incurred from the ill-timed purchase.

Hilton is the world's largest hotel group by number of properties, though the Intercontinental Hotels Group is the larger in terms of the number of rooms. In the US, Hilton is the second largest hotel chain after Marriott International Inc.

Virginia-based Hilton has 2,800 hotels including brands such as Hilton, Doubletree, Embassy Suites, Hampton Inn, Homewood Suites and The Waldorf-Astoria Collection, the 575-hotels La Quinta Inns and LXR Luxury Resorts and Hotels.

A Fortune 500 Company, HNA has grown from a local aviation transportation operator into a multinational conglomerate encompassing aviation, airport management, financial services, real estate, retail, tourism, and logistics.

The group has assets worth over $90 billion, has 11 listed companies, annual revenues of $29 billion and employs nearly 180,000 worldwide.

It has a fleet of over 820 aircrafts, serves nearly 700 domestic and international routes, flies to over 200 cities, and serves 77.4 million passengers annually.

HNA operates and manages Hainan Airlines, Tianjin Airlines, Deer Jet, Lucky Air, Capital Airlines, West Air, Fuzhou Airlines, Urumqi Air, Beibu Gulf Airlines, Yangtze River Airlines, Guilin Airlines, My CARGO, Africa World Airlines, and Aigle Azur.

It has recently been on an acquisition spree by offering to buy Swiss catering and hospitality company Gategroup in April for $1.5 billion, striking a deal in February to buy US electronics distributor Ingram Micro Inc for about $6 billion and paid $2.73 billion to buy airport luggage handler Swissport International Ltd.

It also is the biggest shareholder in Spanish hotel company NH Hotel Group SA.