Bollenbach crowns career with Hilton deal

Jul 10, 2007 8:33 AM

Steve Bollenbach intended to end his career in a blaze of glory by manipulating the $17.2 billion deal that will place Harrah’s Entertainment Inc. (HET) in the hands of a private equity group prior to his retirement at the end of this year.

After all, he had just completed the purchase of all international Hilton hotels that were not part of the Hilton chain.

But, last week, he outdid himself by negotiating the sale of Hilton Hotels Inc. (HLT) for $26 billion, including debt, or $47.50 per share, more than a third better than the most recent price of the stock.

The unexpected move sparked Wall Street trading in all hotel companies, including the major gaming companies. Benefiting the most was MGM MIRAGE Inc. (MGM) which had been rumored to be the next target for a private equity sale. The share price rose nearly $5 in the hours following the Hilton announcement.

Other gaming companies that saw their share price rise included Boyd Gaming Corp. (BYD), Pinnacle Entertainment Inc. (PNK), Isle of Capri Gaming Inc. (ISLE) and Ameristar Casinos Inc. (ASCA).

Not joining the party were Harrah’s, whose buyout price was set at $90 per share, Station Casinos Inc., also looking for $90 when it becomes a privately-held company later this year, and Penn National Gaming Inc., that is in the process of being acquired for $67 per share.

Hilton’s acquisition is being made by The Blackstone Group, a company that already controls more than 100,000 hotel rooms in the U.S. and Europe. Blackstone says it intends to invest in the Hilton properties and brands globally to enhance and grow the business for its owners, franchisees and customers.

Analysts said they do not foresee any competing bids for the Hilton company, which last year reported revenues of $8.11 billion from its more than 2,800 hotels.

For Bollenbach, the deal adds another feather in his cap as he approaches retirement. Also, it provides another major payout to his boss, Baron Hilton, the largest single stockholder in both Harrah’s and Hilton. For his 5.3% stake in Hilton, Barron Hilton will receive more than $1 billion which he reportedly has indicated he will donate to charity.