Sheraton parent goes
with $13.3 billion bid

ITT agrees to buyout
by Starwood Lodging

From staff and wire reports

NEW YORK -- After months of resisting Hilton Hotel Corp.'s uninvited $11.1 billion buyout offer, ITT Corp. said today it has agreed to a $13.3 billion bid from the real estate investment concern Starwood Lodging Trust.

Starwood Lodging has a pending buyout of the Westin hotel brand and is one of the world's biggest real estate investment trusts. By combining with ITT, whose properties include Sheraton hotels and Caesars casinos, Starwood would control one of the world's biggest hotel companies with some 650 hotels in 70 countries and revenues of more than $10 billion.

In Hawaii, ITT's Sheraton unit manages eight hotels, totaling 5,970 rooms. They are the Sheraton Waikiki, Sheraton Princess Kaiulani, Royal Hawaiian, Sheraton Moana Surfrider, Sheraton Maui, Sheraton Kauai, Princeville Hotel and Orchid at Mauna Lani.

Sheraton owns none of the Hawaii hotels but holds long-term management contracts. Starwood's pending acquisition of Westin also would gain it the management of Hawaii's only Westin-managed hotel, the 761-room Westin Maui.

Starwood is offering $82 a share in cash and stock for ITT shares. Its offer includes $15 a share in cash and the remainder in Starwood shares. Hilton Hotels has offered $70 a share in cash and stock for ITT with 50.1 percent of the offer in cash.

ITT Chairman Rand Araskog "must have come to the conclusion that things might not have gone well with Hilton," said Bjorn Hanson of Coopers & Lybrand's lodging and gaming group.

Hilton Chief Executive Stephen Bollenbach likely won't be able to match Starwood's offer, which is a 16 percent premium over New York-based ITT's closing price Friday, analysts say. Hilton is offering $70 a share in stock and cash. Hilton declined comment.