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Hilton Hotels Reaffirms Its Intent to Buy ITT

June 10, 1997|From Times Staff and Wire Reports

Stephen F. Bollenbach, Hilton Hotels Corp. president and chief executive, on Monday reaffirmed his company's commitment to acquire rival ITT Corp.--which owns Sheraton hotels and Caesars Palace in Las Vegas--despite ITT's aggressive efforts to remain independent.

Late last week, Beverly Hills-based Hilton also renewed its legal fight against ITT by trying to force company executives--including ITT Chairman Rand Araskog--to testify and submit documents related to ITT's proposed sale of Sheraton hotels to other buyers. Hilton has threatened to lower its $55-a-share offer if New York-based ITT sells off a substantial part of its hotel and casino gambling operations.

On Monday, ITT signed a definitive agreement to sell five hotels to FelCor Suites Hotels Inc., a Dallas-based real estate investment trust, for about $200 million.

Of more concern to Hilton, though, is that ITT is reportedly considering selling some of its much larger and more prestigious properties--such as the St. Regis hotel in New York and the Phoenician resort near Phoenix--for more than $1 billion. These are the types of "core properties" that attracted Hilton in the first place.

Hilton is worried about so-called change-of-control agreements that could leave FelCor and other new owners free to break their hotel management contracts with ITT if ITT is sold. Normally, those lucrative management contracts would remain in force after an acquisition.

In a letter sent to the ITT board Monday, Bollenbach said he is astonished to hear that the firm had placed the change-of-control provisions into numerous hotel management contracts since Hilton launched its $6.5-billion offer in January. "Even more troubling were reports that ITT is seeking to sell many of its premier hotel properties on similar terms," Bollenbach wrote.

However, Bollenbach wrote that "we are more committed than ever to making this combination a reality."

ITT spokesman Jim Gallagher said FelCor had requested the change-of-control provisions. Gallagher also said the agreements would not prevent Hilton from rebidding for the management of the Sheraton hotels if it acquired ITT.

In legal documents submitted Friday in U.S. District Court in Las Vegas, Hilton requested a speedy deposition of ITT's Araskog, ITT President Robert Bowman and the firm's investment bankers.

Hilton said it's seeking the depositions because it considers the change-of-control provisions unlawful. ITT executives could not be reached for comment.

ITT shares were unchanged at $58; Hilton shares fell 75 cents to $27; FelCor shares were unchanged at $36.25.

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