China’s HNA Group buys US$6.5b stake in Hil­ton

The Sun (Malaysia) - - SUNBIZ -

HONG KONG: China’s avi­a­tion and ship­ping gi­ant HNA Group ex­tended its push into ho­tels and Chi­nese tourism on Mon­day, pay­ing US$6.5 bil­lion (RM27 bil­lion) to buy a 25% stake in Hil­ton World­wide Hold­ings Inc from big­gest share­holder Black­stone Group LP.

The deal mark­ing the sec­ond in­vest­ment in the ho­tel in­dus­try this year by am­bi­tious and fast-grow­ing HNA, now the op­er­a­tor of more than a dozen air­lines in­clud­ing flag­ship car­rier Hainan Air­lines Co and a group with more than US$100 bil­lion in as­sets. In April HNA bought Carl­son Ho­tels Inc, owner of Radis­son ho­tels, for an undis­closed sum.

It also comes as Chi­nese com­pa­nies step up ho­tel deals to tap free-spend­ing main­land China tourists, now trav­el­ling over­seas in record num­bers. Their spend­ing at home and abroad is ex­pected to hit US$72 bil­lion this year, ac­cord­ing to China Travel Academy, a govern­ment-backed re­search in­sti­tute.

Chi­nese com­pa­nies have also been splurg­ing on for­eign ac­qui­si­tions to side­step slow­ing growth at home. The HNA deal would take China’s over­seas M&A to a record US$191 bil­lion so far this year, more than 70% of 2015’s tally.

HNA agreed to buy its shares in Hil­ton for US$26.25 each, a 14.6% pre­mium to Hil­ton’s Fri­day’s clos­ing price, valu­ing the whole of Hil­ton at about US$26 bil­lion. Black­stone took Hil­ton pri­vate in 2007 for US$26.7 bil­lion, in­clud­ing debt, and the pri­vate eq­uity firm listed the com­pany in 2013 in the big­gest-ever ho­tel IPO. – Reuters

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