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Heirs to Wal-Mart's Walton Family Fortune and Investment Banking Giant
 Goldman Sachs Together Investing $1 billion in Global Hyatt Corp

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Cash Expected to be Used to Help Settle Dispute Among its Owners, the Pritzker Family
By Mike Hughlett, Chicago TribuneMcClatchy-Tribune Regional News

Aug. 30, 2007 - The heirs to Wal-Mart's Walton family fortune and investment banking giant Goldman Sachs will together invest $1 billion in Global Hyatt Corp., cash that the hotel giant will primarily use to help settle a bitter dispute among its owners, Chicago's wealthy Pritzker family.

The equity investment announced Wednesday does not affect Hyatt's plans to prepare itself for a possible public stock offering, Tom Pritzker, Global Hyatt's chairman, said in an interview. "In our view they are unrelated to each other."

Hyatt has been making itself "public ready" in recent years, establishing financial reporting measures that would allow it to become a public company. "We are continuing to move in that direction," Pritzker said, referring to Hyatt becoming "public ready."

Still, any IPO isn't likely to happen soon. "We have no specific plans to access the public markets at this time," the company said in a press release.

Goldman Sachs Capital Partners and Madrone Capital Partners will each sink $500 million into Hyatt. Madrone is affiliated with Wal-Mart Chairman Rob Walton and the Walton family, whose now deceased patriarch, Sam Walton, founded Wal-Mart. Rob Walton is Sam's son.

Madrone and Goldman will own a minority stake in Hyatt; their ownership percentage was not disclosed.

Pritzker said both investors are aligned with Hyatt's long-term strategies, and that Walton's vast business relations can help expand the company's business. Their money will primarily be used to provide liquidity to Pritzker family interests.

"It goes in and then it goes out to the family," Pritzker said. "It leaves our strong balance sheet intact. ... We got a win-win for both Hyatt and the family."

Pritzker indicated that the investment allows Hyatt, which oversees roughly 735 hotels and resorts in 44 countries, to continue growing while it pursues its plan to divvy up assets.

The Pritzker family wrangled for years over a breakup of the clan's sprawling $15 billion business empire, of which Hyatt is the crown jewel.

The family's troubles started after Jay Pritzker, Tom's father, died in 1999. Jay's wishes were for the family business to stay intact, but pressure from some family members led to a plan to break up the family fortune. That plan's existence became public in 2002 when two young Pritzker heirs filed suit alleging that some family members had looted their trust funds of $1 billion.

The suit was settled in 2005, allowing the family to proceed toward carrying out the breakup. Tom Pritzker has until 2011 to divest family assets.

Goldman and Madrone's $1 billion investment is a step toward resolution of the family issues, Pritzker said.

Ted Mandigo, an Elmhurst-based hotel industry consultant, said the investment also may give Hyatt more flexibility in the timing of any IPO. Hyatt now has less need to rush into any IPO in order to get money to help settle family issues, he said.

For Madrone and Goldman, their investments allow them the possibility to benefit from any IPO. "It sounds like an opportunity for this group to get in on the ground floor," Mandigo said.

Madrone and Goldman's investment was made through "structured equity," a more complicated equity arrangement than a traditional stock investment. Pritzker declined to elaborate on it.

Hyatt will expand its board of directors by two people to include Greg Penner, a general partner of Madrone, and Byron Trott, a vice chairman of investment banking at Goldman.

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mhughlett@tribune.com

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Copyright (c) 2007, Chicago Tribune

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