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Starwood Probes Chairman's Investment

May 04, 2000|Bloomberg News

Starwood Hotels & Resorts Worldwide Inc., the world's largest hotel owner, appointed a committee of directors to investigate Chairman Barry Sternlicht's controversial investment in Priceline.com Inc. The panel was appointed in response to a lawsuit filed against Starwood by a group of shareholders, Sternlicht said. The suit alleged that Sternlicht breached his fiduciary responsibility by investing personally in Priceline instead of having Starwood make the investment. The suit said an investor group including Sternlicht got $3 million worth of Priceline shares before Priceline's initial offering in March 1999. Those shares were later worth as much as $121.5 million after the firm went public, the suit said. Sternlicht said the suit has no merit. Priceline operates a Web site that lets customers bid for airline tickets and hotel rooms, including Starwood's. Starwood owns the Sheraton and Westin hotel chains. The firm has said Priceline never offered hotel companies the opportunity to invest. Priceline has declined to comment. Separately, Starwood posted a 33% jump in first-quarter profit to $53 million, or 26 cents a share, as sales grew 18% to $1.01 billion. Shares of White Plains, N.Y.-based Starwood fell $1.44 to close at $28.50 on the New York Stock Exchange.

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