HNA Sale of Hilton Stock Could Be Worth $6.5 Billion

Hilton confirmed that one of its largest shareholders, Chinese conglomerate HNA Tourism Group, plans to sell all of its 26.1 percent stake in the hotel company, confirming news reported last week that the company would sell part or all of its shares.

Hilton’s newly amended agreement with HNA Group allows HNA to sell all of its 82.5 million shares in Hilton, revising a previously held agreement that would not have allowed HNA to sell its shares so soon.

Should HNA manage to sell all of its shares in Hilton, it stands to earn approximately $6.5 billion, according to estimates based on the April 6 closing stock price. HNA paid some $6.5 billion for a 25 percent stake in Hilton in October 2016.

Related to the sale, a selling stockholder affiliated with HNA is selling 63,050,000 shares in Hilton, with a 30-day option for underwriters to buy an additional 9,450,000 shares. Any proceeds made from the sale of these shares would go directly to HNA.

Hilton also announced that it will buy back 10 million of HNA’s shares in the company, and that Hilton has the option to buy back up to an additional 6.5 million shares.

As part of Hilton’s newly revised agreement with HNA, one of HNA’s two board of director appointees, Zhang Ling, has resigned.

Early Peek at First Quarter Earnings

Hilton’s filing with the U.S. Securities and Exchange Committee also included early estimates for the company’s first quarter earnings. Hilton anticipates net income ranging from $165 million to $171 million, and earnings before interest, taxes, depreciation and amortization that ranges from $387 million to $394 million.

As Skift reported last week, many Wall Street analysts view HNA’s sale of its shares in Hilton as a positive development for the company that could also boost its share price.

The Chinese conglomerate has been on a recent selling spree under pressure from the Chinese government to pay off massive debts. Additionally, the company has announced it is selling its stakes in Hilton’s two spun-off business units, Park Hotels & Resorts and Hilton Grand Vacations. All together, HNA stands to earn an estimated $9 billion from a sale of all of its shares in the Hilton, Hilton Grand Vacations, and Park Hotels & Resorts.