Hilton said it plans to offer $55 a share for half of the outstanding ITT shares, to be followed by a second-step merger at $55 a share in Hilton common stock.

Hilton said it has identified several areas of potential cost savings, noting that its $3 billion acquisition of Bally Entertainment Corp., completed Dec. 19, will generate annual savings of about $60 million.

Hilton also cited ITT's hotel business as a strategic fit. "ITT's owned full-service hotel portfolio, along with its major gaming presence in Las Vegas, Atlantic City and other jurisdictions, fits perfectly with our stated growth objectives," Hilton said.

In Hawaii, Hilton manages the Hilton Hawaiian Village in Waikiki, the Hilton Waikoloa Village on the Big Island and the Turtle Bay Hilton on Oahu. The company is half owner of the Waikiki hotel and holds a minority interest at Waikoloa but has no ownership interest at Turtle Bay.

ITT Corp. is the parent company of ITT Sheraton Corp., which manages a number of Hawaii hotels, including the Sheraton Maui, the Sheraton Waikiki, and the Sheraton Moana Surfrider.

Hilton said ITT's entertainment businesses "would be carefully reviewed as to their long-term strategic fit with the combined company."

ITT's entertainment businesses include Madison Square Garden, the New York Knicks basketball team, and the New York Rangers hockey team.