Hilton decides not to raise offer further for ITT Position weakens in battle with Starwood to oust target's board

November 11, 1997|By BLOOMBERG NEWS

NEW YORK -- Hilton Hotels Corp. said yesterday that it won't raise its $80-a-share offer for ITT Corp., disappointing some investors and hurting its chances in this week's showdown with rival suitor Starwood Lodging Trust.

The fate of ITT, whose roots go back to 1920 as an international phone company, now hangs on tomorrow's proxy contest between directors nominated by ITT and Hilton. Starwood is bidding $85 a share in cash and stock.

Some investors had expected Hilton Chief Executive Officer Stephen Bollenbach to ante up a final time in his 10-month quest for the hotel and casino company that has cost tens of millions. Now, some of Bollenbach's supporters said they're having second thoughts because Starwood's bid is higher.

"It looks like the end for the man," said Peter Schoenfeld, president of P. Schoenfeld Asset Management, which owns 500,000 shares of ITT; he had been leaning toward Hilton.

"It's a question of how much Starwood stock we want to own and whether we have confidence in their ability."

Hilton warned again that it would drop its hostile bid if ITT's board is re-elected and amended its offer to automatically terminate if that happens. That dashed investor hopes for a bidding war, pushing down ITT's shares $1.88 to $78.44. Starwood's shares fell 19 cents to $57.63; Hilton's fell 38 cents to $31.13.

ITT's shareholders will vote on two slates of directors. ITT said its board plans to continue to auction the operator of Sheraton hotels and Caesars World casinos if re-elected, while Hilton's nominees would support its offer.

"My sense is that Hilton is losing the vote," said Richard Grubman, managing partner of Development Capital LLC, which owns 1.4 million ITT shares. He didn't say how he plans to vote.

Beverly Hills, Calif.-based Hilton is offering cash for 55 percent of ITT, or $44 a share, and stock for the rest. Its bid totals $12.8 billion when ITT's $3.5 billion in debt is added. Hilton began its takeover effort in January at $55 a share. Starwood would allow ITT investors to seek various amounts of cash or stock in its $13.7 billion offer. Some investors could get as much as $85 a share in cash if enough people take shares. It raised its offer Friday from $82 a share.

Pub Date: 11/11/97

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