Hilton Shares Surge On Ladbrokes Bid Talk

Hilton revealed yesterday that it has been fighting off bid approaches for its Ladbrokes unit - and investors watched as its shares raced ahead on rising hopes of a bid battle ensuing for the betting chain.

Hilton is selling its hotels to US namesake Hilton Hotels, and confirmed yesterday that it had received several more expressions of interest for Ladbrokes since it first announced approaches in December, but not one that would encourage it to sell.

The board confirms that further approaches have been received for Ladbrokes since the statement of 22 December," said the group. "These approaches included a number of pre-conditions and failed to recognise the long-term strategic value of Ladbrokes."

The group added it was confident in the prospects of the business and is looking forward to Ladbrokes trading as an independent betting company, once the hotel de-merger is complete.

Hilton Group shares rallied as much as 4.3 per cent, and by the end they closed up 2.4 per cent at 375.25p.

City sources suggested private-equity groups CVC Capital Partners, BC Partners and Blackstone were keen on buying Ladbrokes, which has 2,000 bookmaking shops and online and over-the-phone betting too. But a Hilton spokesman refused to be drawn on a report earlier that a £3.7 billion bid from CVC had been rejected.

Investment bank UBS said yesterday that it valued Ladbrokes at around £3.83bn on a sum-of-parts evaluation.

Analysts said interest in Ladbrokes is expected to grow.

Mark Reed, of broker Teather & Greenwood, said: "This is the start of a bidding process rather than the end. I don't think it would be a surprise if they turned down a £3.7bn bid because it appears to value it in line with rival William Hill and doesn't seem to offer much of a control premium."

Shares in William Hill also rose as bid talk dominated the sector, with its stock closing almost 2 per cent higher.

US-based Hilton Hotels Corp is paying the UK Hilton Group £3.3bn for its hotel operations. The deal is expected to close within the next few months.