Hilton Plan May Attract Buyers, Analyst Says

From Bloomberg News

Hilton Hotels Corp., once it sheds its casinos, could be viewed as an acquisition target by the same companies that bid for Inter-Continental Hotels & Resorts, said CIBC Oppenheimer analyst David Wolfe.

Wolfe and several Hilton investors met Wednesday with Chief Executive Steve Bollenbach. The meeting followed last week's announcement that the company is considering separating its hotel and casino operations and buying Circus Circus Enterprises Inc.

Once freed of the casinos and most of its debt, it's logical that the companies that pursued Inter-Continental would also be interested in Hilton, Wolfe said. Both operate large chains of upscale hotels.

"There isn't anything available quite like Hilton," Wolfe said. "How often is the Waldorf and the Palmer House available away from the gaming situation?"

Bass Plc of the U.K. agreed in February to buy Inter-Continental, which operates 187 hotels, for $2.9 billion from Japan's Saison Group. Patriot American Hospitality Inc., Starwood Hotels & Resorts Trust and Marriott International Inc. also were speculated to be bidders.

Beverly Hills-based Hilton said last week it is considering separating into two companies. Its 250 hotels, which include New York's Waldorf-Astoria and Chicago's Palmer House, would probably receive a higher value from investors if separated from the slumping gaming industry.

At the same time, combining its casino business with Circus Circus would add well-known casino resorts such as Luxor to Hilton's gaming business. Hilton runs casinos on the Las Vegas strip and the Atlantic City boardwalk, among other places.

Bollenbach today said Hilton was interested in buying Circus Circus at a good price, Wolfe said. Bollenbach wasn't more specific, he said.

Bollenbach indicated that he'd still like to combine Hilton with Ladbroke Group Plc, Wolfe said. The U.K. company has the right to the Hilton brand name outside the U.S.

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