In a record acquisition for the global hotel industry, US private equity firm Blackstone Group LP, has bought out the Hilton Hotels Corp, for about $26-billion in cash. Hilton''s 2006 net income was $572 million on revenue of $8.16 billion.

Blackstone will pay $47.50 for each Hilton share, a 32-per cent premium over Tuesday''s closing price. The PE firm is not revealing the debt and equity portion of the deal at this stage.

Bear Stearns, Bank of America Corp., Deutsche Bank AG, Morgan Stanley and Goldman, all of which served as financial advisers to Blackstone, provided financing pledges for the Hilton deal.

The Hilton is the world''s largest hotel group by number of properties, though the Intercontinental Hotels Group is the larger in terms of the number of rooms. In the US Hilton is the second largest hotel chain after Marriott International Inc.

The deal comes two years after Hilton Hotels Corporation merged with Hilton International, its sister company in the UK, in a $6-billion deal that split off Ladbrokes, the UK bookmaker, into a stand-alone company.

Hilton''s brands include Hilton, Conrad Hotels & Resorts, Doubletree, Embassy Suites, Hampton Inn, Hilton Garden Inn, Hilton Grand Vacations, Homewood Suites by Hilton, and The Waldorf-Astoria Collection.

Billionaire Barron Hilton, the son of founder Conrad Hilton and co-chairman of the Beverly Hills, California-based company, will get $990 million for his 20.8 million shares. According to Forbes magazine Barron Hilton, the father of celebrity sisters Paris and Nicky Hilton, is worth $1.3 billion.

Blackstone already has a significant portfolio of hotel and resort properties, which includes more than 100,000 hotel rooms in the United States and Europe.

The acquisition gives Blackstone, whose 2,800 hotels include brands such as Hilton, Doubletree, Embassy Suites, Hampton Inn, Homewood Suites and The Waldorf-Astoria Collection, the 575-hotels La Quinta Inns and LXR Luxury Resorts and Hotels, just under 500,000 hotel rooms, 60,000 rooms behind Intercontinental Hotels Group.

In April Blackstone had sold Extended Stay America, a budget business hotel chain, to Lightstone, a real estate investment group, for $8 billion.

Blackstone, which raised $4.1-billion in an initial public offering in late June (See: Blackstone float raises $4.13 billion), said it intends to invest in the Hilton properties and brands globally to enhance and increase the business. The PE firm said that it expected no significant divestitures as a result of the transaction.

Hilton has announced plans to open 1,000 more hotels outside North America in the next 10 years, as global demand continues to outstrip supply.

Founded in 1919 with a single property in Cisco, Texas, by Conrad Hilton, the group will be taken private, ending more than its 60 years as a public company.

The first hotel with the Hilton name opened in 1925 in Dallas. The company went public in 1946, and purchased New York''s luxury Waldorf-Astoria hotel in 1949.

In 1964, it spun off the UK-based Hilton International, and then reunited with it last year by buying the hospitality unit of UK-based Hilton Group Plc for $5.71 billion. (See: Hilton Group to sell hotels business to sister company in the US)

The hotel industry has been in the midst of a multi-year boom as demand has out stripped supply due to limited construction of new hotels and allowed hoteliers to steadily raise rates, making hospitality assets a much sought after commodity. Hotel deals have quickened even faster this year compared with last year''s $70 billion-plus estimated by International leisure property investors, Jones Lang LaSalle Hotels.

London-based research firm Private Equity Intelligence Ltd reported that over 100 real estate funds expect to raise a record $69 billion this year. In June Morgan Stanley raised $8 billion for the largest high-return real estate fund and Goldman Sachs Group Inc. gathered $4 billion for a similar fund. Blackstone has raised more than $7 billion for a fund that''s slated to top Morgan Stanley''s when it closes later this year, with about $10 billion of capital commitments.