Hilton Hotels said on Friday it agreed to sell the Scandic Hotel chain to European private equity group EQT for about $1.1 billion as it seeks to reduce debt.
Hilton is targeting an investment grade credit rating after taking on debt to buy Hilton International in February 2006 in a $6 billion deal. Scandic was part of the Hilton International deal and was put up for sale in August.
The company is looking to unload other properties as it puts more emphasis on managing hotels rather than owning them. The company has about 17 other properties on the block.
Hilton expects the sale of Scandic, the largest hotel operator in the Nordic region with 132 hotels, to reduce 2007 recurring earnings by 10 cents a share.
"This particular transaction will enable us to reduce our income from leased hotels which, combined with a stronger balance sheet, would significantly strengthen our credit profile," said Hilton Chief Financial Officer Robert La Forgia in a statement.
Hilton, which also operates Hampton Inns and Embassy Suites, will maintain a presence in the region with three Hilton hotels in Finland, two in Sweden, and one in Denmark.
The deal is expected to close in April 2007. EQT has operations in Northern Europe and China and currently manages approximately 10.5 billion euros in 10 funds.
In total, EQT funds have invested in about 50 companies.