HILTON ACQUIRES BRITISH HOTEL GROUP
BEVERLY HILLS - 01/16/05 - The Hilton Hotels Corp. has said it will buy the hotel assets of Britain's Hilton Group PLC for $5.7 billion in cash, creating the world's biggest hotel company in revenue terms.
The deal reunites two brands that split in the 1960s, allowing Hilton to instantly overtake rivals such as Starwood Hotels & Resorts Worldwide Inc. and Marriott International Inc.
It also makes Hilton, which had been limited in scope to the US and Canada, a global player, which will allow the company to expand some of its well-known domestic brands, such as Hampton Inn, to India, China, and other markets.
Under the terms of the deal, Hilton Hotels will only acquire the British company's lodging operations, while the Hilton Group will change its name to Ladbrokes PLC and focus on its online and in-store betting operation, which has hundreds of locations throughout Europe.
When done, Hilton Hotels will operate nearly 2,800 hotels and 475,000 rooms in 80 countries.
Its brand names will include Hilton, Conrad, Doubletree, Embassy Suites, Hampton Inn, Hilton Garden Inn, Homewood Suites by Hilton, Scandic, and Hilton Grand Vacations Club.
Hilton said it will continue its strategy of selling off hotels and entering into more lucrative management and franchising deals. This year, the company sold about 20 hotels for more than $1 billion.
The deal is subject to regulatory and shareholder approval on both sides of the Atlantic with both companies saying it was likely to be completed by the first quarter of 2006.
After the deal closes, Hilton will have about 20% of its rooms outside the US, about the same ratio as competitor Marriott.
The company said it expects to save about $30 million per year from consolidating technology, billing, and other functions, and layoffs will be "minimal," according to Hilton executives.
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