* IPO to raise up to $2.37 bln in sale of 11.5 pct of Hilton
* Could raise $2.72 bln if overallotment option exercised
* Sale of 112.8 mln shares expected at between $18-$21 per
* Blackstone to retain 76.2 pct stake
* Deutsche, Goldman Sachs, BofA and Morgan Stanley lead
By Tanya Agrawal
Dec 2 Hilton Worldwide Inc said its initial
public offering would raise up to $2.37 billion in the
biggest-ever hotel IPO, more than doubling Blackstone Group LP's
Hilton is expected to launch its initial public offering
this month and the sale of about 11.5 percent of its shares
would value the company at up to $32.5 billion, including debt.
Blackstone took Hilton private in 2007 for $26.7 billion,
including debt, in one of the largest leveraged buyouts before
the 2008 global financial crisis.
Blackstone has invested in total about $6.4 billion in
Hilton and its 76.2 percent stake after the IPO would be worth
up to $15.7 billion.
Its private equity and real estate funds, which provided the
equity for the leveraged buyout in 2007, are not selling any
shares in the IPO. A Blackstone debt fund has registered to sell
Hilton shares in the IPO equivalent to a roughly 0.5 percent
stake, according to a regulatory filing.
"The Blackstone Group has timed the Hilton IPO at the
perfect market inflection points of increasing global consumer
travel demand, daily room rates, and occupancy," said
Christopher Muller, a professor at Boston University's School of
The U.S. hotel industry has been recovering with room rates
and occupancy levels expected to increase in 2014, according to
PricewaterhouseCoopers. The Dow Jones U.S. Hotels index
has risen 30 percent so far this year.
Hilton's IPO will be the second-biggest IPO in 2013, behind
oil pipeline holding company Plains GP Holdings LP,
which raised $2.82 billion.
It will also be bigger than Twitter Inc, which
raised $1.82 billion.
Blackstone's plans for an IPO of Hilton come as private
equity firms sell or list assets to take advantage of a surging
IPO market that has been spurred by a market rally and low
interest rates that have encouraged investors to buy stocks.
Hyatt Hotels Corp raised about $950 million in 2009 in
the biggest hotel IPO to date.
Another Blackstone-backed hotel company, Extended Stay
America Inc, raised about $565 million last month.
Blackstone also plans an IPO of hotel chain La Quinta,
sources told Reuters last week.
The investment firm also listed Brixmor Property Group Inc
earlier this year.
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Hilton expects to price the offering of 112.8 million shares
at between $18 and $21 per share, giving the company an equity
value of $20.7 billion, according to a filing with the U.S.
Securities and Exchange Commission on Monday. ()
Hilton is selling 64.1 million shares in the offering,
raising about $1.3 billion at the top end of the price range.
Shareholders will offer the remaining 48.7 million shares.
The IPO could raise $2.72 billion if underwriters exercise
their rights to buy another 16.9 million shares.
The company said it would use the proceeds from the offering
to repay $1.25 billion of its total debt of $11.8 billion as of
Founded in 1919 by Conrad Hilton, Hilton's brands include
such high-end names as Conrad and Waldorf Astoria.
Hilton, which operates in 90 countries, has 4,041 hotels, or
665,667 rooms, under its umbrella.
The company itself owns or leases 157 hotels, including the
Waldorf Astoria in New York and the Hilton Hawaiian Village.
"Investor appetite is expected to be strong for the IPO as
Hilton is a pre-eminent name in the field," said David Menlow,
president of IPOFinancial.com.
Hilton will list on the New York Stock Exchange under the
Lead underwriters for the offering are Deutsche Bank,
Goldman Sachs Group Inc, Bank of America Corp and Morgan
The company said on Monday that J.P. Morgan, Wells Fargo
Securities and 18 others would also underwrite the IPO.