Hilton slams ITT hotel salesReuters
LOS ANGELES -- Hilton Hotels Corp. has launched a fresh barrage of attacks aimed at ITT Corp. in an effort to press its $6.5 billion takeover bid for the rival hotel and gambling company.
Hilton Chief Executive Officer Stephen Bollenbach sent a letter yesterday to ITT's board members labeling as "shark repellent" contract clauses that could prevent Hilton from managing some Sheraton hotels if Hilton acquired ITT.
In federal court Friday, Beverly Hills, Calif.-based Hilton also filed requests for documents and depositions from ITT management covering the nearly five-month takeover battle.
Hilton launched its $55-a-share tender offer for ITT Corp shares in late January. ITT rejected the bid as inadequate and said it would refocus its strategy on core hotel and gambling assets. ITT, based in New York City, owns the Sheraton brand hotels and Caesars brand casinos.
Hilton nominated a slate of directors to unseat ITT's board and sought, through federal court, to force ITT into calling for a shareholder vote in mid-May. But Hilton lost that legal battle in April when a federal judge ruled ITT could hold the meeting as late as mid-November.
The latest round of attacks comes on the heels of ITT's sale yesterday of five Sheraton hotels to FelCor Suite Hotels Inc. for $200 million.
Hilton objects to provisions that give FelCor the right to seek new hotel management if ITT is acquired by another company. It argues such stipulations lower the value of ITT if acquired in whole.
ITT spokesman Jim Gallagher, however, countered that the provisions do not preclude Hilton, or any other purchaser, from rebidding for the management of the Sheraton hotels.
Gallagher also pointed out that FelCor's management requested the change-of-control provision.
Hilton also complains that ITT is selling hotels with other companies without talking to Hilton, a ready, willing and financially able buyer of hotel and gambling assets.
"I am confident that the price Hilton can offer for ITT's core assets is higher than any bona fide price that ITT can obtain from any other qualified purchaser," Bollenbach wrote in his letter.
Gallagher countered that ITT had "consistently demonstrated in our sale of assets that we have gotten incredibly high prices."
He said Hilton's offer for ITT is roughly nine times ITT's cash flow. ITT will sell the five hotels to FelCor at about 12.5 times cash flow.
Finally, Hilton filed notices to take depositions and seek documents in the takeover battle. Hilton is seeking information that would give Hilton knowledge about ITT's deal-making that it has yet to disclose.
The filings were made in U.S. District Court in Las Vegas.