Blackstone’s Jonathan Gray doesn’t speak much Mandarin, but he seems to know the right words for reaching Chinese investors, after the global head of real estate for the alternative investment giant agreed to sell a roughly 25 percent stake in Hilton Worldwide Holdings to China’s HNA Group for $6.5 billion.
HNA, the parent company of China’s Hainan Airlines, has agreed to pay $26.25 per share for Hilton, according to a statement to the New York stock exchange today, with the hotel management firm’s stock having closed at $22.91 per share last Friday.
Should the deal be completed, it would bring Blackstone’s total sales of assets to Chinese firms up to more than $17.5 billion since the beginning of 2015. The investment firm was also integral to Anbang Insurance’s $14 billion bid for Starwood Hotels and Resorts earlier this year, which fizzled when the Chinese firm mysteriously backed away from its bid.
$17 Billion in HNA Acquisitions So Far This Month
Like Anbang, HNA is a serial acquirer of overseas assets, with the Hilton deal actually the second transaction between the Chinese conglomerate and Blackstone this month, after HNA EcoTech agreed to buy Pactera Technology International, a China-based IT outsourcing firm from the US investment firm for around $675 million in cash, according to a report in the Wall Street Journal.
“This investment is consistent with our strategy to enhance our global tourism business, and we look forward to working together on new initiatives that leverage our respective strengths, expertise and tourism platforms to provide travelers more choice, value and world-class services,” HNA vice chairman and CEO Adam Tan commented in a statement regarding the Hilton investment.
The hotel deal is the third US acquisition for HNA this month after the company founded by billionaire Cheng Feng agreed just two weeks ago to buy 10 golf courses in Seattle for $137 million. During the first week of October HNA’s Avolon Holdings subsidiary agreed to buy the aircraft leasing business of New York’s CIT Group for $10 billion, in a deal which Bloomberg reported would put the Chinese airline in charge of the world’s third-largest rental air fleet.
Also this year, the company bought out Carlson Hotel Group in April, in a deal valued at one time at over $2 billion.
Blackstone Continues to Cash in on Chinese Connections
The preliminary deal with the Chinese aviation and tourism conglomerate follows Hilton’s sale last year of the Waldorf Astoria Hotel in Manhattan to China’s Anbang Insurance for $1.95 billion, as well as a string of other real estate transactions between Blackstone and mainland-based firms. Hilton Worldwide is currently controlled by Blackstone, but the proposed sale to HNA would make the mainland firm the hotel brand’s largest single shareholder.
The proposed transaction is expected to close early next year and values Hilton at about $26 billion. Blackstone had purchased the hotel chain in 2007 for $26 million and staged a successful $2.35 billion IPO of the company, which owns the Conrad, Double Tree and other hotel brands in addition to Hilton, in 2013. Blackstone’s stake in Hilton would be reduced to 21 percent following the transaction.
In July of this year Blackstone sold a portfolio of mainland retail assets to mainland developer China Vanke, pulling in $1.9 billion for the US investment firm. In addition to the Waldorf Astoria deal, Blackstone also sold the $6.5 billion Strategic Hotels and Resort portfolio to Anbang this year for $6.5 billion.