updated 10/14/2005 8:28:11 AM ET 2005-10-14T12:28:11

Hilton Group PLC, which operates Hilton hotels outside the United States and gambling shops in Britain, said Friday it is negotiating to sell its hotels business to U.S.-based Hilton Hotels Corp.

“The board confirms that it has received an indicative offer from Hilton Hotels Corp. which it is currently evaluating,” the London-based company said.

The Financial Times reported that the negotiations envisioned an outright cash purchase of the hotel business for around 3.6 billion pounds ($6.3 billion). The company’s shareholders would get the proceeds, while retaining their stake in the remaining Ladbrokes betting shop business.

Hilton Hotels Corp. operates the Hilton brand in the United States, while Hilton Group operates around 400 hotels in the rest of the world. The split dates to 1964, when Hilton Hotels Corp. sold international rights to the brand.

Hilton Group’s shares rose 12 percent to 341.25 pence ($5.99) in midday trading in London.

Merrill Lynch said the reported price appears “very good.”

“Clearly there are a number of issues that could affect the price, including Hilton’s unusually low tax charge and the lack of new synergies between HHC and Hilton International, given that the businesses already share a booking system, rewards system, marketing arrangements and brand,” Merrill Lynch added.

The company, which also operates thousands of Ladbrokes betting shops across Britain, reported a dip in half-year net profit last month but said the outlook was positive for steady growth.

Besides the flagship Hilton brand, Hilton Hotels Corp.’s lodging properties include the Double Tree, Embassy Suites and Hampton brands.

Hilton Group PLC, which operates around 400 hotels around the world excluding the United States, said Friday that it is negotiating to sell its hotels business to U.S.-based Hilton Hotels Corp.

"The board confirms that it has received an indicative offer from Hilton Hotels Corp. which it is currently evaluating," the London-based company said in a statement.

Hilton Hotels Corp. operates the Hilton brand in the United States, while Hilton Group operates in the rest of the world. The split dates to 1964, when Hilton Hotels Corp. sold international rights to the brand.

Hilton Group's shares rose 13.5 percent to 346 pence ($6.08) in early trading in London.

The company, which also operates thousands of Ladbrokes betting shops across Britain, reported a dip in half-year net profit last month but said the outlook was positive for steady growth.

Besides the flagship Hilton brand, Hilton Hotels Corp.'s lodging properties include the Double Tree, Embassy Suites and Hampton brands.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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