Chinese conglomerate HNA Group Co. is planning to sell its 26% stake in Hilton Worldwide either in part or in full. The total value of the investment is roughly around $6.5 billion, making HNA the largest shareholder in the hotel chain. The timing of the sale is dependent on market conditions, but if HNA sells its stake at market value, it could gain more than $2 billion in profits.
In March, the company sold its stakes in Hilton Grand Vacations for $1.1 billion and Hilton Park Hotels & Resorts for approximately $1.4 billion.
HNA Group is struggling with a massive debt of around $100 billion which resulted from the purchase of assets worldwide. Its other investments include a 9% holding in Deutsche Bank. The company is looking to sell some of its assets to deal with the financial burden.
This decision comes at a time when the Chinese government is pulling up organizations that have invested heavily in foreign companies. Many Chinese firms like Dalian Wanda Group have been reducing their stakes overseas. The Chinese government is also looking to attract major companies like Alibaba to trade their shares in the country.
Hilton shares rose more than 1% following the news of the proposed sale. If HNA manages to get the transaction done at current market price levels, the return on investment could come to around 42%. This deal is likely to get the necessary approvals as Hilton would perhaps prefer a sale as opposed to seeing its largest shareholder go bankrupt.