Hilton Worldwide: Stock Spinoffs, Reverse Stock Split

Big news for shareholders and prospective shareholders of Hilton Worldwide (HLT):

First, the Board of Directors at Hilton Hotels is spinning off two businesses to shareholders. It is bundling its timeshare business up into a new business called Hilton Grand Vacations (HGV). And some of the real estate located at hot-spot destinations is going to be packaged into a publicly traded company called Park Hotels & Resorts (PK). This spinoff will occur on January 3rd. On the same day, Hilton will execute a 1-for-3 reverse stock split. This is done because some corporations feel shame about having a $15 stock price, thinking a $45 stock has more credibility. Nearly everyone sees through this maneuver, but the game goes on.

What I see as the risk for shareholders of Hilton, either for the parent entity or its successors, is the distribution of debt that will be accorded to each of these … Read the rest of this article!