Hilton to sell 11 UK hotels to focus on city centre - report

Well, deal's gone through.


LONDON (AFX) - Britain's Hilton Group PLC this afternoon confirmed the
disposal of its hotel division to its US namesake for 3.3 bln stg in cash.
The company, which will take on the name of its betting arm Ladbrokes PLC
following the deal, said it would return a "substantial" portion of the proceeds
to shareholders. Following the recent disposal of 16 UK Hilton International
hotels and related assets, Hilton Group has 3.7 bln stg in surplus cash.
"We believe this transaction delivers significant shareholder value," said
chairman Ian Robinson in a statement. "The board is fully committed to
Ladbrokes, which it believes is a strong and valuable business which will be
well placed to deliver growth and good returns."
The sale of the UK group's hotel chain to the US' Hilton Hotels Corp is
expected to be completed towards to the end of the first quarter of 2006, when
details of the cash return will be revealed. Investors can then expect to
receive their payback "early in the second quarter", said the company on a
conference call.
Robinson intends to stay in his current role, but Ladbrokes head Christopher
Bell will take over as chief executive of the new group, replacing David
Michels. Rosemary Thorne, formerly of Bradford & Bingley PLC, will become the
new finance director.
Bell maintained that today's long-awaited deal would not pave the way for a
break-up of the group, despite expressions of interest in the gaming business
from three private equity groups.
"We're in here for the long haul. We've got a successful and strong company
... and we intend to keep make it even stronger," Bell told reporters.
Ladbrokes will likely have a market valuation of "nearer four million (stg)
than three million" on completion of the deal, according to the incoming chief
executive.
Ladbrokes has built a strong on-line gaming business in Europe over the past
couple of years, but Bell refused to say whether the group would push into the
US following today's news. Hilton Group's close association with its US
namesake has long hampered Ladbrokes's expansion into North America, where the
legal status of on-line gambling remains uncertain.
The group also said that trading at the Ladbrokes chain has been in line
with expectations since a trading statement in November, and that it was
"confident" of the unit's prospects for the current financial year.
"Overall, the Board views the prospects of the Ladbrokes Group with
confidence as it pursues its strategy focused entirely on betting and gaming and
the growth opportunities that brings," it said.
Hilton Group shares closed 4-1/4 pence higher at 368.