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ITT board meets on bids
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November 5, 1997: 8:05 p.m. ET
No decision made regarding Hilton, Starwood offers for hotel company
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NEW YORK (CNNfn) - ITT Corp.'s board of directors met for more than four hours Wednesday to discuss rival takeover bids from Hilton Hotels Corp and Starwood Lodging Trust, but adjourned without a formal announcement.
The 11-member board -- which includes Chairman and Chief Executive Rand Araskog and President and Chief Operating Officer Robert Bowman -- met at ITT's headquarters in New York.
ITT has become the target of a fierce bidding war between Beverly Hills-based Hilton and Phoenix-based Starwood Lodging. On Monday, Hilton surprised investors by raising its hostile bid to $9.3 billion, putting it within striking distance of Starwood's $9.8 billion friendly offer.
The move prompted ITT officials to announce it would meet with Hilton's advisers to consider Hilton's offer, marking the first time in 10 months ITT was willing to sit down and talk to Hilton.
ITT spokesman Jim Gallagher told CNNfn the company did not plan to issue a formal statement about Hilton's revised offer. However, he said the company's "definitive agreement with Starwood remains in effect,"
The meeting comes exactly a week before the hotel and gaming concern's much-anticipated annual meeting when shareholders will be made to choose between re-electing the current ITT board or a dissent group of Hilton-appointed directors.
As it stands now, ITT's board is still recommending an offer from Starwood Lodging Trust, which entered into a binding agreement to acquire ITT for $9.8 billion, or $67 in stock and $15 in cash for eachITT share.
Yet, a growing number of ITT's investors are favoring Hilton's latest $9.3 billion offer consisting of $80 a share in cash for 55 percent of ITT's outstanding shares and two shares of Hilton stock for each remaining share of ITT stock. In addition, Hilton is offering a new form of preferred stock that has a present value of $5 or more.
"At this point, Bollenbach wins," said Mario Gabelli, chairman of Gabelli Funds, referring to Hilton's chief executive, Stephen Bollenbach.
Starwood's Chairman Barry Sternlicht "has to do something," said the famed investor, who owns more than 2 million shares of ITT.
"He could be very smart and very gracious... and declare a victory... and take his drop-dead fee... and move on; or he could bring in a partner. But he has to do something and he is going to have to do it very quickly," Gabelli said.
If ITT and Starwood part ways, ITT is obligated to pay the real estate investment trust $195 million for a so-called "break-up" fee.
Starwood, which had been widely expected Wednesday to raise its offer for ITT, kept silent. The company's board of directors met Wednesday morning, but Starwood declined to discuss the status of its bid.
ITT's other board members include: Bette Anderson, vice chairman of Kelly Anderson Pethick & Associates Inc.; Nolan Archibald, chairman and CEO of Black & Decker Corp.; Robert Burnett, chairman of Meredith Corp.; Paul G. Kirk Jr., counsel to Sullivan & Worcester; Edward Meyer, chairman of Mitretek Systems; Benjamin Payton, president of Tuskegee University; Vin Weber, partner of Clark & Weinstock Inc.; Margita White, president of Association for Maximum Service Television Inc.; and Kendrick Wilson III, managing director at Lazard Freres & Co.
-- by staff writer Robert Liu with reporting by Donald Van de Mark
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