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Hilton Worldwide raises over $2.3 billion in biggest-ever hotel IPO

Olivia Oran
Wednesday, 11 Dec 2013 | 4:36 PM ET
The Hilton Hotel in New York.
Franziska Krug | Getty Images
The Hilton Hotel in New York.

Hilton Worldwide, the world's largest hotel operator, raised roughly $2.34 billion in its IPO on Wednesday after pricing shares toward the high end of the range.

Backed by private equity and real estate firm Blackstone Group, Hilton priced its shares at $20. The company and existing shareholders sold 117.6 million shares. They had offered 112.8 million shares at an expected range of $18 to $21.

The Blackstone funds that bought Hilton are not selling any shares in the offering. Hilton Worldwide shares will begin trading on the New York Stock Exchange on Thursday, under the ticker symbol "HLT."

Blackstone took Hilton private in 2007 for $26.7 billion, including debt, in one of the largest leveraged buyouts before the 2008 global financial crisis.

(Watch: Get a piece of the Hilton IPO: Cramer)

Hilton has cleaned up balance sheets: Pro
Hilton prices upsized IPO at $20 per share. CNBC's Simon Hobbs and CNBC contributor Andrew Busch weigh in on the big-name offering.

The U.S. hotel industry has been recovering, with room rates and occupancy levels expected to increase in 2014, according to PricewaterhouseCoopers. The Dow Jones U.S. Hotels index has risen nearly 30 percent so far this year.

Blackstone's IPO plans for Hilton come as private equity firms sell or list assets to take advantage of a surging IPO market that has been spurred by a market rally and low interest rates.

Hyatt Hotels raised about $950 million in 2009 in what was then the largest hotel IPO.

Another Blackstone-backed hotel company, Extended Stay America, raised about $565 million in November. Blackstone also plans an IPO of hotel chain La Quinta, sources previously told Reuters. The investment firm also listed Brixmor Property Group earlier this year. The company said it would use the proceeds from the offering to repay $1.25 billion in debt.

(Watch: Hilton on par with Marriott: Pro)

The Hilton IPO also comes after Blackstone refinanced about $13 billion of the hotel chain's debt.

Founded in 1919 by Conrad Hilton, Hilton's brands include such high-end names as Conrad and Waldorf Astoria. Hilton, which operates in 90 countries, has more than 4,000 hotels and 670,000 rooms under its umbrella. The company itself owns or leases 157 hotels, including the Waldorf Astoria in New York and the Hilton Hawaiian Village.

Deutsche Bank, Goldman Sachs, Bank of America, and Morgan Stanley led the offering.

By Reuters

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