China’s HNA to buy 25% Hilton stake from Blackstone

The $6.5B deal will reduce Blackstone’s holding in the company to 21%

The Hilton Midtown at 1335 Sixth Avenue
The Hilton Midtown at 1335 Sixth Avenue

Chinese shipping and aviation giant HNA Group will buy a roughly 25 percent stake in Hilton Worldwide Holdings from Blackstone Group, the company announced Monday.

Under the $6.5 billion deal, HNA will pay just over $26 a share in cash for the stake, which is 15 percent more than Hilton’s Friday closing price of just under $23 a share, the Wall Street Journal reported. The sale will reduce Blackstone’s holding to 21 percent and make HNA the biggest shareholder in the company.

Earlier this year, Hilton announced around 70 percent of its hotel properties would be spun off into a publicly-traded real estate investment trust.  The move splits Hilton into three district entities. HNA will own around 25 percent of all three companies upon the closing, which is expected to take place in the first quarter of 2017.

Negotiations between HNA and Blackstone reached an advanced stage in June, according to the Journal.

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HNA agreed to hold onto the stake for two years, and will need board approval to purchase any more shares. Both HNA and Hilton want to make use of China’s expanding outbound tourism market.

This deal is yet another example of a major Chinese investor making a play for commercial real estate in the United States. Earlier this month, China Life Insurance purchased a $2 billion stake in Starwood Capital Group’s U.S. hotels.

In March, Beijing-based insurance giant Anbang Insurance Group agreed to buy Blackstone’s Strategic Hotels & Resorts portfolio, which has 16 hotels including JW Marriott Essex House at 160 Central Park South. The company paid $1.95 billion for the Waldorf Astoria in 2015.  The company also tried to buy Starwood Hotels & Resorts [TRDataCustom] for $14 billion, but abruptly withdrew the offer in March.  The move paved the way for Marriott International to acquire Starwood for $13 billion. [WSJ]Miriam Hall