As Hilton Hotels' stock rode a tide of rumors about an extravagant bid for the company from Asian suitors, the Beverly Hills-based firm said Wednesday that it will hire a financial adviser to help it "optimize stockholder value."
The announcement dropped another shoe in Hilton's corporate drama. The first was kicked off May 12 at the annual stockholders' meeting, when Chairman Barron Hilton announced that the company was not seeking a buyer but would consider any purchase offers. Barron Hilton had just come into voting control of 34% of the firm's stock after a 10-year legal struggle over his father's estate.
Hilton's stock price, which was trading at about $65.50 just before the chairman's comment, has since risen about $30 a share, including $7.50 in the last two days. The stock closed Wednesday at $95.125, up $3.125, in heavy trading on the New York Stock Exchange, where it hit a new high of $98 before subsiding. The stock rose $4.375 on Tuesday.
In the midst of this week's market speculation in Hilton stock, a rumored offer of $134 a share by a Japanese company was cited by a New Jersey firm that provides telephone tips over a special 900 number. Elsewhere, rumors of a $120-a-share bid also have been reported.
Leroy A. Judge, assistant to Barron Hilton, said Wednesday that the company "won't comment on that type of speculation," adding that "we prefer not to contribute to the chaos that these rumors (set off) on the street."
Judge said the company will select a financial adviser in the next week to 10 days. It is expected that the adviser will delve into such questions as whether to sell all or part of the company.
One possibility would be the sale of Hilton's hotels except for its lucrative Nevada hotel-casino resorts. In the past, Barron Hilton has shown a high regard for the hotel-casinos, which for years have brought in a disproportionately large share of corporation profits.
Hilton owns and operates 14 hotels, including the Waldorf Astoria in New York and the Las Vegas and Flamingo Hiltons in Nevada, and manages 34 others that are partly or wholly owned by others. Four of the hotels have gambling operations. Three of them are company-owned and are in Nevada, and the fourth, in Australia, is partly owned by Hilton. Hilton filings show the hotel-casinos accounted for about 53% of the company's total income in 1988.
No 'Specific Inquiries'
Barron Hilton, who also is chief executive, said the firm's board at a regular meeting Wednesday authorized one of its committees to retain the financial adviser to evaluate various strategies. "The exercise of prudent judgment," said the executive, "dictates that the company fully examine the various alternatives which can serve to benefit our stockholders while preserving corporate objectives."
He said the meeting was not precipitated over any "specific inquiries or contacts between the company and third parties."
His assistant, Judge, later said the company has received some "expressions of interest" but no "firm offers." Because of such expressions, he said, the board "thought it prudent to retain an adviser to give some guidance." He added that there are "several alternatives besides selling." While he did not detail the alternatives, Judge confirmed that one would be selling part of the company's assets.