Hotel Takeover Targets


Its very bullish for investors that Blackstone (BX) is buying HLT for $47 in cash. For one thing, that values HLT at 16x EBITDA (in other words, 16 times, roughly, cash flows). Over the past year deals have been more likely to occur at 10-12x EBITDA. The higher the multiple, the more difficult it is for the buyout firm (in this case Blackstone) to pay down the debt they take on to make the purchase. The fact that this deal, a $26 billion deal, is occurring at 16x shows that private equity firms are willing to bear additional risk to win deals. Who benefits? Public stockholders. Lets not forget there is $1 trillion dollars that needs to be put to work.

With HLT being bought it makes sense to look at the other hotel companies with good balance sheets, decent earnings growth, that are trading for less than 15x cash flows. These are all now buyout candidates.

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