Hilton, Grand Casinos Shareholders OK Spinoff

Shareholders of Hilton Hotels Corp. and Grand Casinos Inc. on Tuesday approved the spinoff of Hilton’s casinos into a new company, Park Place Entertainment Corp., and Park Place’s purchase of Grand’s three Mississippi resorts for stock valued at about $650 million.

Beverly Hills-based Hilton said it expects to complete the spinoff and purchase by year-end. Park Place Entertainment would be the world’s largest casino company by square footage and revenue and, with its purchase of Grand’s resorts, would also be the largest in Mississippi--the U.S.’ No. 3 gambling market, after Las Vegas and Atlantic City.

Hilton, in winning shareholders’ approval, cleared a potential obstacle to its plan of separating its 260 upscale hotels from the slumping casino business. Some Grand shareholders had opposed the sale, saying they were offered too low a price.

Minnetonka, Minn.-based Grand is expected to lose business next year when Mirage Resorts Inc. opens its $600-million Beau Rivage casino resort in Biloxi, Miss.

Grand owns casinos in Biloxi, Gulfport and Tunica, Miss.

Grand shareholders, under the terms of the purchase, would receive Park Place Entertainment stock that Grand and Hilton said in June would be worth about $650 million, or $15.37 a share.

The purchase would represent a premium of 66% to Grand’s share price Tuesday, which was unchanged at $9.25 on the New York Stock Exchange. It’s a 20% discount, however, to Grand’s 52-week high of $19.13, touched on June 30.

Hilton shares rose 38 cents to close at $21.31 on the NYSE.

Under the deal, Park Place would assume about $550 million in Grand debt.