Golden Nugget Inc. acknowledged Thursday that the executor of the Conrad Hilton estate has rejected its $488.3-million offer to buy 27.4% of Hilton Hotels Corp., adding that it is studying its next move.
As previously reported, James E. Bates, executor of the estate of Conrad N. Hilton, founder of Beverly Hills-based Hilton Hotels, said in a letter to Golden Nugget Chairman Stephen A. Wynn that the $72-per-share price for the 6.78 million Hilton shares owned by the estate is "inadequate."
Barron Hilton, chairman of Hilton Hotels and son of Conrad Hilton, also had rejected the offer made Wednesday by Golden Nugget as inadequate.
Bruce A. Levin, Golden Nugget vice president and general counsel, said Bates, in effect, "terminated" the offer by Golden Nugget, which owns hotels and casinos in Las Vegas and Atlantic City, N.J.
"We made an offer; he has rejected it," Levin said. "I'm just surprised with a deal of this magnitude that he was able to get back to us so quickly."
When asked what Golden Nugget's next move will be, Levin replied: "We're thinking about it."
Golden Nugget said Wednesday that it was considering making a separate $72-per-share offer for the rest of Hilton's 24.7 million shares.
The 6.78 million shares owned by the Hilton estate have been tied up in probate court since shortly after Conrad Hilton died in 1979. At issue is whether all or part of the shares belong to the Conrad N. Hilton Foundation, a Los Angeles-based philanthropic foundation, or whether Barron Hilton can exercise an option to buy the shares.
In his letter, Bates said there is "a substantial issue" over whether Bates has the power to sell the stock. Bates said he wouldn't undertake such a sale without prior approval of the probate court.
Bates was unavailable for comment.
Analyst John Rohs of Wertheim & Co. in New York said that Golden Nugget's offer raises "more questions than answers."
"It seems to me that it's not in the hands of the (Hilton) foundation, or Barron Hilton, or Steve Wynn," he said. "It's in the hands of the probate court."
Rohs said that Wynn would have little to gain by sweetening the offer immediately because "at this juncture, $72 is the best price the stock has seen."