The fast-moving president and chief executive of Hilton Hotels Corp., Stephen F. Bollenbach, has recently found himself doing something out of character: waiting.
Nearly five months after launching a hostile takeover bid for rival ITT Corp., Bollenbach has been stymied at every turn. A few days ago, Bollenbach fired off a testy letter to the ITT board of directors and started another round of legal maneuvering to force the company to the bargaining table.
So far, however, the corporate standoff continues, with no end in sight.
Despite the months-long stalemate, Hilton executives say the $10.5-billion bid for ITT, which owns Caesars Palace in Las Vegas and the Sheraton hotels, remains on track. But, concedes Bollenbach, "I think anything that slows down the process . . . is bad for our deal."
A fast and clean takeover of ITT would have been a crowning achievement for Bollenbach, 54, and bolstered his reputation as a top-notch corporate strategist. Instead, the so-far fruitless pursuit has overshadowed the classic corporate turnaround Bollenbach has engineered at Beverly Hills-based Hilton, one of America's most well-known businesses.
"He took a sleepy company and converted it into a dynamic growth company in a very short period of time," industry analyst Andrew Zarnett said. "He's got a vision. He gets things done."
The executive wasted little time upon arriving at Hilton early last year. Within a few days, Bollenbach had crafted a focused strategy for the hotel and casino company, which had spent several years heading down different paths. Within four months, Bollenbach had announced a $3-billion deal to take over Bally Entertainment, making Hilton the world's largest player in the gambling business. By summer's end, he had established close ties to Hilton's long-estranged international operations.
But the glory of last year's deals and accomplishments seems to have faded amid the standoff with ITT. The takeover target has even managed to steal some of Bollenbach's thunder by selling off its sporting operations--which include the New York Knicks basketball team and Madison Square Garden--at lofty prices. Bollenbach had proposed doing the very same thing as part of his takeover plan, but ITT has gotten the praise.
"Everything that Stephen wanted to do, ITT management is doing now," said Edward Oppedisano, a bond analyst at Deutsche Morgan Grenfel.
ITT says the sale of its sports business and a few hotel properties had been in the works long before Bollenbach proposed a takeover.
"We are doing things we had planned on doing and are doing them in an accelerated fashion," spokesman Jim Gallagher said.
If ITT manages to get away, Hilton will continue on its course of buying individual hotels and gaming properties and seeking other takeover targets, Bollenbach said. But the executive, who spends about half his day devoted to the ITT offer, said he remains committed to making the deal happen--even if time is working against him.
"There is no other company that fits so well with ITT as we do," he said.
Bollenbach had won wide respect for his financial savvy and decisive nature long before he took the job at Hilton in February 1996 after a brief stint as chief financial officer at Walt Disney Co. His arrival was greeted warmly by investors, who bid up Hilton shares more than 10% after his appointment was announced.
After graduating from UCLA and Cal State Northridge, Bollenbach, who was born and reared in Downey, began his financial career working for industrialist D.K. Ludwig, once the richest man in the world.
After working in Ludwig's private domain, Bollenbach began to establish his credentials as a corporate strategist. He was the chief architect behind Disney's $19-billion merger with Capital Cities/ABC Inc. and was also behind the controversial breakup of Marriott Corp. He also helped flamboyant developer and hotel operator Donald Trump resolve his financial woes.
After arriving at Holiday Corp., which owned the Holiday Inn chain, Bollenbach championed the radical idea of selling off the well-known but slow-growing lodging operation in favor of focusing on Holiday's lucrative gambling business, now known as Promus.
"He was the first [in the company] to think that the Holiday Inn business was not going to be able to grow at a rate that was acceptable to us," said Promus Chairman Michael Rose, who hired Bollenbach during the mid-1980s. "It was not the kind of thing that was discussed much until he arrived."
At many companies, most notably Disney and Hilton, Bollenbach also challenged a long-standing corporate aversion toward debt. Disney, for instance, assumed a huge amount of debt to finance the Cap Cities/ABC takeover.
Hilton debt loads have also risen in the last year, in what has been described as the "The Bollenbach factor," according to Oppedisano.
Despite concern among bondholders, Bollenbach said he sees little reason to avoid using debt to finance company expansions if an investment-level credit rating can be maintained.