Major Chinese tourism conglomerate, HNA Group, is reportedly buying a 25 percent stake in Hilton Hotels International. This is a transaction valued at roughly $6.5 billion, the equivalent of about $26.25 per share, in cash. Perhaps more significantly, this stake will reduce Blackstone’s interest in Hilton, and by as much as 21 percent. The companies now expect the transaction to close within the first quarter of next year; and on the heels of Hilton’s previous announcement to spin off its Park and HGV brands, also expected to end at the close of the year.
Included in the transaction, HNA enters into a stockholders agreement with Hilton as well as with Park Hotels & Resorts and Hilton Grand Vacations (to own 25 percent shares of all three companies). At closing, then, the agreement will allow HNA to now appoint a pair of directors (one from HNA and a second to be elected independently) to Hilton’s Board of Directors. This will then bring the total to 10 members.
According to this agreement, HNA has agreed to some restrictions on its ability to sell its interest in Hilton for at least the next two years. The agreement also limits HNA’s ability to buy more than its current 25 percent of Hilton’s existing outstanding shares without the chain’s consent. In addition, the agreement says that HNA will then vote its shares in excess of 15 percent proportionality among the other stockholders; of course, certain exceptions apply. Finally, Blackstone will still have its two seats on Hilton’s Board; Jon Gray will stay as the board’s chairman.
“We are pleased to welcome HNA Group as a long-term investor and strategic partner,” explains Hilton Hotels president and CEO Christopher J. Nassetta. HNA Group has a broad portfolio of successful travel and hospitality businesses and a proven track record of creating value in this industry. 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.”
In addition, HNA Group vice chairman and CEO, Adam Tan notes, “Hilton is an iconic global hospitality company with an unmatched portfolio of high-quality brands and a reputation for operational excellence. 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.”