Hilton Worldwide is doing some housekeeping with a very large broom. Form 10 Registration Statements have just been filed with the U.S. Securities and Exchange Commission (SEC); the first step to completing the division into 3 stand alone publicly traded companies.
The company wishes to take advantage of tax and capital market efficiencies, also expecting to unlock growth opportunities within its capital-light fee-based business, by separating the timeshare and real estate assets. Christopher J. Nassetta, President & Chief Executive officer of Hilton stated, “We look forward to completing the spins later this year, realizing significant benefits for all three companies and continuing to generate long-term value for Hilton shareholders.”
The majority of Hilton’s real estate business that includes 70 hotels and 35,000 rooms will be a real estate investment trust whilst the timeshare business, Hilton Grand Vacations, will manage approximately 50 club resorts in Europe and the United States with an exclusive long-term licensing agreement with Hilton Worldwide to operate and sell under the Hilton Grand Vacations flag. Hilton worldwide will focus on operating the management, franchise and branding side of the business plus retaining the ownership of some hotels.
Shareholders do not get a say in relation to the change of status quo of Hilton, but it is anticipated that it will boost the long-term shareholder value. The Board of Directors of Hilton Worldwide has to give their final approval to the proposed split of the company. Existing Hilton shareholders will receive a distribution of the new entities’ stock in all 3 companies, once the transaction is completed which is due to be at the end of the year.