Blackstone, While Buying Up the World, Adds Hilton Hotels

 |  Includes: BX, HLT-OLD
by: Tate Dwinnell

Yesterday, Blackstone Group (NYSE:BX) announced they were purchasing all outstanding shares of Hilton Hotels (HLT-OLD) for 47.50, a whopping 32% premium for around 26 billion (including debt). Wow!

This comes within a year of Blackstone buying out CarrAmerica Realty for 5.6 billion and most recently Equity Office Properties for 36 billion. The buyout of EOP was a bit questionable and came at what many consider a possible top of the REIT market. Now there is the big Hilton buyout, which undoubtedly makes Blackstone one of the (if not THE largest) holders of real estate in the world (they now own 580,000 hotel rooms in 76 countries).

Wouldn't a purchase like this with a large premium have made more sense a few years ago, before global real estate prices went parabolic? Perhaps this is more about greed, ego and power than doing what's in the best of interest of shareholders. After all, Schwartzman already made his money with the IPO. You've got one unhappy shareholder here - I bought a very small position yesterday with expectations of some kind of snap back rally. Those expectations are gone after last night's announcement. I'll take a hit on Thursday.

I wonder if a few folks didn't catch wind of this deal going down at a few cocktail parties this past weekend? The stock was up 6% with volume more than twice the daily average… and with a pre-holiday half day of trading! The rich get richer. Surprise, surprise. I look forward to reading all the commentary on this one.