Blackstone hits pay dirt with Hilton offering
Private equity firm reaps more than 2.3 times the amount it invested in the hotel operator
Hotel operator Hilton Worldwide raised US$2.35 billion in its initial public offering on Wednesday, returning to the public markets six years after Blackstone took it private in one of the largest deals of the leveraged buyout boom.
Hilton, whose brands include Conrad and Waldorf Astoria, priced its shares at US$20, within the expected range, giving the world's largest hotel operator an equity value of US$19.7 billion.
The stock began trading on the New York Stock Exchange yesterday.
Blackstone took Hilton private in 2007 for US$26.7 billion, including debt, at the height of the market. The financial crisis hit soon after, leaving the company facing a large debt pile due to the leveraged buyout and a recession that hit business. Blackstone refinanced about US$13 billion of the hotel chain's debt before launching the offering.
It plans to use the proceeds from the offering to repay US$1.25 billion in debt.
"Blackstone must be wiping their brow knowing that the company had a label since they bought it at the top [of the market]," said David Menlow, the president of research firm IPO Financial Network. "Even with the markets changing the way they have, it's been a beneficial outcome for them."