UK's Hilton Hotels Sold

Published: Friday, December 30, 2005 Online-Casinos.com

UK'S HILTON HOTELS SOLD

Brit company will revert to its famous Ladbrokes brand and gambling focused business

The big hotel deal has finally gone through - after weeks of negotiation and intense speculation on both sides of the Atlantic the Hilton group announced in London late yesterday (Thursday) that it is to sell its hotels to U.S. namesake Hilton Hotels Corp for GBP 3.3 billion (US$5.67 billion) The deal, which involves around 2300 hotels in the US owned by HHC and about 400 around the world owned by Hilton Group, including 68 in the UK is to be completed early next year.

The US group is paying 11.3 times projected 2006 earnings of the UK business before interest and taxes.

Its relevance to the gambling world is considerable, as the UK Hilton group, divested of its hotels and cash-rich is expected to revert to its famous Ladbrokes brand and focus its huge energies on both land and interactive gambling. With the progressive British gambling reforms in place and UK licensing available some time in 2007, there are clear synergies.

Nick Hodson, an analyst at Lloyds TSB Private Banking, said: "It does seem to make sense for both sides. This allows a more focused play for the UK in terms of Ladbrokes. "My hope is that, standing alone, Ladbrokes gets re-rated to a similar kind of rating as William Hill."

Ladbrokes has been adding more shops and revamping existing ones to capitalise on the fast-expanding UK gambling industry. The value of the overall UK gambling market is expected to increase by 33 percent to GBP 11 billion by 2010 as more casinos are opened and gaming laws are relaxed. Expansion into the US was "an option".

A newly-independent Ladbroke plc has a rosy future despite private equity bid interest, and has no big acquisition target on the horizon, Chief Executive designate Christopher Bell said. The executive said that he was under no pressure to go out and make an acquisition to bolster up a new Ladbrokes nor under pressure from at least three private equity groups which have expressed interest in bidding for Ladbrokes.

"We have the best brand in Britain and probably in the world and I feel under no pressure to do a deal. I will concentrate on doing a good job," Bell said in an interview.

Hilton UK confirmed last week (see previous InfoPowa report) that there was interest in buying Ladbrokes and industry sources said at least three private equity groups - BC Partners, Blackstone and CVC Capital - were in the line-up.

In the new Ladbrokes, Hilton's Ian Robinson will continue as chairman and Rosemary Thorne from the Bradford & Bingley Plc banking group will take over as finance director.