* Hilton files for $1.25 bln IPO
* Blackstone took Hilton private for $26.7 bln in 2007
* Hilton brands include Conrad, Waldorf Astoria, Doubletree
* Deutsche Bank, Goldman, BofA, Morgan Stanley lead
By Tanya Agrawal and Olivia Oran
Sept 12 Blackstone Group LP is hoping the
stock market will value Hilton Worldwide Inc at around $30
billion, including debt, a source familiar with the situation
said, as the private equity firm filed papers on Thursday to
take the U.S. hotel operator public.
In the initial public offering, which sources have said is
expected early next year, Blackstone plans to sell a minority
stake in Hilton to raise up to $1.25 billion, according to a
U.S. Securities and Exchange Commission filing. ()
Blackstone, which took Hilton private in 2007 at the height
of the buyout boom for $26.7 billion, is hoping that a
recovering economy, growing demand for business travel and
rising room rates will allow it to command a rich valuation for
Revenue per available room, a measure of room rates and
occupancy levels, has increased about 6.9 percent over the past
three years in the Americas and demand has returned to
pre-economic crisis levels, according to Smith Travel Research
Inc, which tracks hotel industry data.
As a result, hotel stocks have been on a tear. The Dow Jones
U.S. Hotels index has risen 18 percent this year.
Marriott International Inc is up 15 percent, while
Starwood Hotels and Resorts is up about 20 percent.
Marriott and Starwood trade around 12 to 13 times their
earnings before interest, tax, depreciation and amortization.
Analysts said they expect Hilton's shares to trade around the
same multiples as these rivals.
"They compete very favorably with Starwood and Marriott and
Hyatt, which are already there. They probably do quite well in
that spectrum," said Keith Brenan, chief operating officer of
Weitzman Group Inc, a real estate consultant. "Marriott is
probably doing a little bit better than they are. They have a
stronger rewards program."
Founded in 1919 by Conrad Hilton, the hotel operator's
brands include such high-end names as Conrad and Waldorf
Astoria. Hilton has 4,041 hotels, or 665,667 rooms under its
umbrella, located in 90 countries. The company itself owns or
leases 157 hotels, including the Waldorf Astoria in New York and
the Hilton Hawaiian Village.
Hilton's 2012 EBITDA was about $2 billion. But the source
said Blackstone's internal projections for profit suggest that a
$30 billion enterprise value would be in line with where its
rivals were trading.
Hilton has about $15.4 billion in debt. Last month, sources
told RLPC that the company was preparing a $12 billion debt
financing package to refinance existing debt ahead of the IPO.
Blackstone declined to comment.
Blackstone's plans for an IPO of Hilton come as private
equity firms have been trying to sell or list assets to take
advantage of a surging IPO market, as a market rally and low
interest rates have enticed investors into stocks.
The global volume of IPOs rose 14 percent to $79.2 billion
in 2013 up to August, compared with the same period last year,
according to Thomson Reuters data.
Other recent IPOs from private equity-backed companies
include industrial and construction supplies company HD Supply
Holdings Inc, childcare operator Bright Horizons Family
Solutions Inc and cruise line operator Norwegian Cruise
Line Holdings Ltd.
Blackstone has also sought to unload its real estate assets.
In July, it filed to take hotel chain Extended Stay America Inc
public. It also has filed to take public its shopping center
unit Brixmor Property Group and is looking to sell or take
public hotel chain La Quinta.
Reuters and other media had reported in August that
Blackstone was preparing to bring Hilton to the public market.
Deutsche Bank AG, Goldman Sachs Group Inc,
Bank of America Corp and Morgan Stanley are the
lead underwriters on the Hilton offering.
Hilton plans to use the proceeds from the offering to repay
debt and for other general corporate purposes.
The filing did not disclose the number of shares on offer or
their expected price. The amount of money a company says it
plans to raise in its first IPO filings is used to calculate
registration fees. The final size of the IPO could be different.