Hilton Worldwide Holdings Inc. (NYSE: HLT) has filed with the Securities and Exchange Commission to have a secondary offering. The Blackstone Group L.P. (NYSE: BX) will be acting as the Selling Stockholders for this offering of a total of 90 million shares with an option for an additional 13.5 million shares. The underwriters for the offering were listed as Deutsche Bank, Goldman Sachs, BofA Merrill Lynch and Morgan Stanley.
Hilton was taken private in 2007 by Blackstone in a leveraged buyout for roughly $26 billion. This was a record buyout for a hospitality company, and remains one of the biggest private deals on record.
On December 12, 2013 Hilton re-entered the public market after its shares priced at $20 giving the company an equity value of about $19.7 billion. Blackstone raised roughly $2.35 billion of the initial public offering of about 117.6 million shares, this was another record among hospitality companies.
The total equity value of 90 million shares in Hilton stock equates to a 9.1% stake in the company. Should those investors choose to exercise the additional shares option of 13.5 million, Blackstone’s percentage held would drop by 1.4% more in the total equity of the company. Blackstone will still retain a controlling interest of 56.8% for only the offering of 90 million shares, or 55.4% if the overallotment option is taken.
A price has not been set for this secondary offering but recent market prices roughly around $25 would value the 90 million shares at $2.25 billion with the additional shares option valued at $337.5 million. This is in the neighborhood of value that Blackstone was looking for in its IPO of Hilton back in December. Hilton noted that it will not receive any proceeds from the sale of shares of these common shares by the selling stockholders, something typical of when insiders and private equity holders sell shares.
Hilton’s share price was down 1.7% at $24.85 in late-Thursday trading. Its post-IPO trading range has been $20.55 to $25.92, and the consensus analyst price target is $27.29.
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