Hilton Hotels Corp. said Tuesday it will split into a hotel company and a casino business that will buy Grand Casinos Inc.’s three Mississippi resorts for $1.2 billion in stock and assumed debt.
Hilton’s lucrative hotel chain is one of the biggest in the U.S., managing or owning 260 properties. Hilton’s casino business, already the largest in the U.S., will gain access to the nation’s top gambling market after Las Vegas and Atlantic City.
The transaction is the bold move that shareholders have been expecting since Hilton Chief Executive Stephen Bollenbach took over in 1996. The agreement left some investors asking why Bollenbach moved before knowing how much a $600 million Mississippi resort being built by Stephen Wynn’s Mirage Resorts Inc. will cut into the business of Minnetonka, Minn.-based Grand Casinos.
Wall Street was unimpressed with the deal. Shares of Hilton, based in Beverly Hills, fell $2.87, to $28.62; Grand Casinos shares lost $1.50, to $17.
Hilton shareholders will receive one share of the hotel company and one of the casino company for each current share.
Profits of upscale hotels have risen in recent years, but casino operators’ profits have lagged.
