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ITT rejects new Hilton bid
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August 14, 1997: 7:40 p.m. ET
Company turns down sweetened offer of $8.3B, an increase from $6.5B
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NEW YORK (CNNfn) - ITT Corp. said Thursday it has again rejected a hostile offer from Hilton Hotels Corp., this time turning down $8.3 billion, or $70 per share.
Previously, Hilton had bid $6.5 billion, or $55 a share.
In voting unanimously to reject the latest offer, ITT's board of directors called it "inadequate and not in the best interests of ITT shareholders," according to an ITT statement.
The New York-based company will continue its planned split into three separate firms, which will produce greater shareholder value than the Hilton bid, ITT said.
"Hilton management's lack of a track record in growing a large chain" of hotels could have a negative effect on a combined firm, according to the statement.
Hilton blasted back at ITT, saying the rejection came as no surprise.
"We absolutely expected that they would do this because it's in keeping with the charade they've been putting on," Hilton spokesman Mark Grossman said.
"When they say they're considering the offer … that is so they can tell the courts that they're considering it -- not that they're actually considering it," he said. "That's baloney."
Hilton doesn't plan to increase its offer, which the company is pursuing through a federal court case already filed in Nevada, Grossman said.
The rejection is really an attempt to deprive shareholders of their voting rights and for ITT managers to keep their jobs, he said.
ITT has "no intention of letting their shareholders have one word in this process," Grossman said. "What we've heard from many, many ITT shareholders is that what they want is a vote."
The latest move leaves the ball in ITT's court, said Jason Ader, a gaming and lodging analyst at Bear, Stearns.
"They believe in their heart of hearts that their comprehensive plan is going to do more than Hilton's $70 per share," Ader said. Proving that before ITT's shareholder meeting in November is going to be the challenge, he said.
"Right now, I think Hilton has clearly put a wrench in the process by offering $70 per share," Ader said.
The announcement came after the closing bell on Wall Street, which saw ITT shares ease 3/16 to 63-3/4. Hilton's stock inched up 1/16 to 30-3/16.
ITT announced July 16 that it plans to split into three publicly held companies. ITT Destinations will operate hotels and casinos, ITT Corp. will publish phone directories, and ITT Educational Services will provide post-secondary education. 
--Will Morton
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