M&A

Suits Target Hilton-Blackstone Accommodations

Two shareholders, seeking class-action status in Los Angeles court, say the $20.1-billion price is too low.
Roy HarrisJuly 9, 2007

Blackstone Group LP’s agreement to pay $20.1 billion for Hilton Hotels Corp. was challenged by two Hilton shareholders in Los Angeles Superior Court.

The Associated Press reported that holders claim management and directors breached their fiduciary duty by accepting a deal that was too low. The holders seek class-action status for the litigation, and an order blocking Blackstone’s purchase of Hilton, which was announced last week.

Also, the suits ask the court to force Hilton officials to seek a higher offer for the 500,000-room hotel company, based in Beverly Hills, Calif., according to AP. Hilton CEO Stephen F. Bollenbach, along with directors and other executives, and Blackstone, are named as defendants in both suits.

Hilton’s board has approved the deal, which calls for holders to receive $47.50 a share in cash, a premium of about 40 percent over its prior-day closing price of $33.87. Terms call for Hilton to pay Blackstone a $580-million break-up fee if the hotel company backs out of the deal, according to AP.

One loose end in the deal arrangements is the future role of Matthew J. Hart, the longtime Hilton CFO who is now president and chief operating office, and who was set to succeed Bollenbach at the end of this year. The Blackstone deal is expected to close in the fourth quarter.

4 Powerful Communication Strategies for Your Next Board Meeting