Hilton IPO Arrives at a Fair Price

Hilton Worldwide itself is offering 64,102,564 of the shares and 53,538,060 of the shares are being sold by private equity backers.

The private equity giant The Blackstone Group LP (NYSE: BX) will own a majority stake in the company. This is also being touted as one of the most profitable deals for private equity taking a hotel chain private and then bringing it public all over again.

Hilton Worldwide intends to use the net proceeds from the offering and available cash to repay approximately $1.25 billion of term loan borrowings outstanding under its senior secured credit facilities. It appears that the deal is coming at close to 13-times expected EBITDA and Blackstone appears to be close to 75% ownership after the deal, depending upon the overallotment option.

The underwriting syndicate is massive here. Joint book runners are listed as Deutsche Bank, Goldman Sachs, BofA Merrill Lynch, Morgan Stanley, J.P. Morgan and Wells Fargo Securities. Co-managers are listed as follows: Blackstone Capital Markets, Macquarie Capital, Barclays, Mitsubishi UFJ Securities, Citigroup, Credit Suisse, HSBC, RBS, Baird, Credit Agricole CIB, Nomura, Raymond James, RBC Capital Markets, UBS Investment Bank, CastleOak Securities, Drexel Hamilton, Telsey Advisory Group and Ramirez and Co. The overallotment option of up to an additional 17,646,093 shares at the initial public offering is coming from the shareholder led by Blackstone affiliates rather than the company.