Hilton International sold to US cousin for £3.3b

The Hilton brand is to be reunited after a gap of 40 years after a deal was agreed last night for the £3.3b sale of UK-based Hilton International to US-based Hilton Hotels Corporation (HHC).

The two companies split in 1964, with HHC permitted to operate only in the US market, while Hilton International managed the brand in the rest of the world.

Eight years ago HHC and Hilton Group - the parent company of Hilton International - signed a wide-ranging marketing alliance and since then have held talks about a formal reunion on several occasions.

Stephen Bollenbach, chairman of Hilton Hotels Corporation, commented: "This transaction represents the final and logical step in a process that began in 1997 with the signing of a strategic alliance between HHC and Hilton International."

David Michels, chief executive of Hilton Group, said: "This is a good deal for our shareholders and will offer new opportunities for the 70,000 employees currently working in Hilton International around the globe."

On completion of the deal (expected in February) Michels and his deputy Brian Wallace will transfer to the enlarged Hilton company to help with the transition process.

Ian Carter, chief executive of Hilton International, will take up the role of executive vice president and chief executive officer of Hilton International at HHC.

Hilton Group said it hoped to "make a substantial return of cash to shareholders in due course."

News of renewed talks between the two companies first emerged in October, with the price originally pitched at more than £3.6b. But this was reduced after a £400m sale-and-manage-back deal in November.

The catalyst for the talks was the upturn in the US hotels market. The recent moves by Hilton International to sell off some of its property assets and concentrate on management contracts and franchising may have been a further factor.

Yesterday's sale involves hotels in 80 countries. Some are fully owned, some leased, some on management contracts and some franchised.

US-based Hilton Hotels owns, manages or franchises 2,300 hotels, resorts and vacation properties with 365,000 rooms in the USA, Canada and Mexico.

UK-based Hilton International operates 403 hotels - 261 as Hilton and 142 under the mid-market Scandic brand.

Selling its hotels division will leave parent Hilton Group to concentrate on its Ladbrokes betting arm, although private equity companies have recently shown interest in buying this as well. The listed company will be renamed Ladbrokes, under chairman Sir Ian Robinson.

by David Shrimpton

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