HNA Makes $6.5 Billion Deal to Acquire 25 Percent Stake in Hilton

by | Nov 1, 2016 | Chains

In a transaction valued at roughly $6.5 billion, HNA Group has acquired approximately 25 percent equity in interest from Blackstone Group LP, which was Hilton’s biggest shareholder prior to the deal.

HNA Group, a Chinese aviation and shipping giant, announced the deal in late October, and global hospitality industry experts say the investment will greatly extend HNA’s push into hotels, specifically in the Chinese tourism industry. HNA is a fast-growing company that operates more than a dozen airlines, including its lead brand, Hainan Airlines Co. All told, the group is estimated to possess more than $100 billion in assets. This deal is the second major hotel acquisition of the year for HNA, which acquired Carlson Hotels, Inc. for an undisclosed sum in April. Carlson Hotels Inc. owns the Raddison brand of hotel properties.

In a release announcing the deal, Hilton leadership described the investment as a fantastic opportunity to grow the Hilton brand in one of the world’s fastest-growing tourist markets.

“We are pleased to welcome HNA Group as a long-term investor and strategic partner,” said Christopher J. Nassetta, president and CEO of Hilton. “HNA Group has a broad portfolio of successful travel and hospitality businesses and a proven track record of creating value in this industry. We believe this mutually beneficial relationship will open new opportunities for our brands and guests around the world, particularly in light of HNA’s strong position in the fast-growing Chinese travel and tourism market, the largest outbound travel and tourism market in the world.”

According to the Chinese Travel Academy, a government-supported research group, Chinese tourists are now travelling in record numbers, both inside and outside of their native country. The China Travel Academy has reported that the money spent by Chinese tourists this year is expected to reach $72 billion.

For its shares in Hilton, HNA paid $26.25 each, which was a 14.6 percent premium to Hilton’s closing price when the deal occurred. The group HNA purchased these shares from, Blackstone, originally took Hilton private in 2007 for nearly $27 billion. In a release, Blackstone praised its time working with Hilton while also painting an optimistic picture of the company’s future.

“Since our initial investment in Hilton nine years ago, the company and its leadership team have delivered phenomenal results,” said Jon Gray, who is the global head of real estate at Blackstone and the chairman of the Hilton Board of Directors when the deal was made. “We think the company’s future is bright, and this long-term investment from HNA Group only adds to its potential.”

As part of the deal, HNA will name a pair of directors to Hilton’s Board, which will now include 10 members. Blackstone will also retain two seats on Hilton’s Board, one of which will remain under the control of Jon Gray, who will also remain as the board’s chairman. HNA, which was established in 1993, is lead by co-founder and chairman Chen Feng, and it ranks as one of China’s most active international dealmakers, with about $20 billion of deals announced this year, according to calculations done by the newswire Reuters.

HNA leadership has said that they are looking to leverage the company’s strengths, expertise, and tourism reach to give travelers throughout the globe more choice and value. Hilton’s brands include Conrad Hotels & Resorts, Curio, Double Tree, and Hilton.

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