ITT’s first legal punch hurts Hilton

Gary Thompson

Thursday, Jan. 30, 1997 | 11:59 a.m.

ITT Corp. won a preliminary legal skirmish and said its directors will meet Tuesday to consider Hilton Hotels Corp.'s $10.7 billion takeover bid.

Meanwhile, Hilton said it would file documents Friday relating to its $55-a-share tender offer for ITT stock with the Securities and Exchange Commission.

Late Wednesday, U.S. District Judge Philip Pro denied Hilton's bid to stop ITT from filing suit outside Nevada and set a March 5 hearing date on Hilton's bid to bar ITT from adding directors to its board in an effort to thwart the takeover.

ITT executives have kept a low profile since Hilton's stunning bid to create the world's largest gaming and lodging company was announced Monday. In fact, they didn't even respond to Hilton's pre-emptive legal filings, which were made Monday in expectation that ITT would rebuff the initial offer.

Pro said Hilton hadn't shown evidence it would be harmed by ITT litigation in other jurisdictions since any such cases could be consolidated.

To date, officials of ITT, Caesars World parent company, haven't responded publicly to Hilton's offer. Privately, they've been sharply critical of it.

As a result, most observers believe ITT Chairman Rand Araskog and President Bob Bowman will urge directors to reject Hilton's $55-a-share bid outright. They are expected to present alternatives that range from demanding a far higher price to launching their own hostile attempt to take over Hilton.

ITT spokesman Jim Gallagher said he doesn't expect directors to make a final decision Tuesday.

"Management has already begun to provide them with the kind of information they'll need to make a careful and deliberate examination of the offer and put them in a position to make a recommendation to shareholders," he said.

That recommendation would come within 10 business days of Hilton's filing of the tender-offer documents with the SEC.

Meanwhile, one of gaming's top executives said he doesn't believe the Hilton bid necessarily augurs a new wave of takeover attempts.

"The idea that this is the first volley in a consolidation movement for the industry is doubtful," said Glenn Schaeffer, Circus Circus Enterprises president.

"The reasons for consolidating are threefold. One, does it improve your access to and cost of capital?

"Two, can you find cost efficiencies in putting certain companies together? That's a much-heralded but rarely achieved concept.

"And three, are you buying something that should increase the potential rate of growth for your company?

"We're strategically indifferent to whether or not the Hilton-ITT deal goes through. It doesn't change our destiny or outlook or our ability to do what we have to do to generate continued growth in shareholder values."

Schaeffer said he has no idea what ITT might do to counter the Hilton bid, and downplayed speculation that ITT might pursue merger talks with Circus Circus. "It hasn't happened and I doubt it will," he said.