NEW YORK -- Hilton Hotels Corp.'s quest to win ITT Corp. ended decisively Wednesday after ITT shareholders rejected its $10 billion hostile bid in favor of a merger with upstart hotel owner Starwood Lodging.
Starwood, which owns or manages hotels bearing the Westin, Marriott and Doubletree names, will pay $10.6 billion to add ITT's Sheraton and Caesars chains and become the world's largest hotel and casino company.
While ITT was victorious over Hilton, the vote marked the end for a company that was once the quintessential conglomerate with products spanning from Wonder bread to Avis rental cars. ITT had been shrinking for years, but Hilton's pursuit forced it to abruptly sell off businesses such as its half of Madison Square Garden and eventually seek rescue from Starwood.
"It's a bittersweet experience for me," said ITT chairman Rand Araskog, who will hand over his post after 18 years to Starwood chairman Barry Sternlicht.
ITT's preliminary estimates showed 65 million of the 90 million shares that were voted favored re-electing ITT's current board rather than approving Hilton's proposed directors, who would have accepted the hostile bid. Final tallies of the results will take one to two weeks.
ITT is still free to field other offers, but no other suitors are expected to emerge.
Hilton chief executive Stephen Bollenbach promised to drop his stormy courtship of ITT after nearly 10 months, three bids and court battles to force the shareholder vote that ultimately spurned him.
"We are not going to be in a bidding contest with Starwood," said Mr. Bollenbach, whose company owns Hilton hotels and Bally's casinos.
From the beginning, the battle for ITT was heated and acrimonious, with Bollenbach publicly criticizing Araskog and ITT's board for not meeting with Hilton. After Starwood became involved, both suitors attacked each other's bids with multi-page newspaper advertisements.
"This has been an ugly time for me the last four weeks," said Sternlicht, who has defended the value of Starwood's stock against criticism from Hilton that he called "garbage."
Sternlicht raised Starwood's initial $10.25 billion purchase price last week after Hilton countered with a $10 billion bid that offered more cash than Starwood's. Starwood will now pay $85 a share in cash and stock.
Bollenbach said he apologized after the shareholder vote to Araskog for insulting him, but he didn't think the bidding war ever became spiteful.
"It wasn't like someone said my children are ugly," he said.
Araskog, who shook hands with his nemesis after the meeting, said he had no ill feelings toward Bollenbach. But the outgoing ITT leader was visibly upset in a news conference after the vote as he talked about how he had been maligned as a manager.
Araskog said Hilton's pursuit did not allow him to realize his long-term vision for ITT, forcing him to prematurely sell several businesses and abandon the company's sports entertainment ventures.
"I was always looking at the year 2001," Araskog said. "We needed the time and we did not get it."
Wednesday's meeting, held at ITT's posh St. Regis hotel in midtown Manhattan, drew so many shareholders that many were moved into the penthouse and several other rooms to watch the meeting on video screens.
Bollenbach said afterward that Hilton wouldn't try to buy another brand-name chain, but would look at buying individual hotels and casinos to build its business. He said Hilton's profit on the more than 300,000 ITT shares it owns will help offset the costs of its failed takeover pursuit.
ITT shares fell 811/4 cents to close at $75.311/4 on the New York Stock Exchange. It has risen from $43.75 when the takeover fight began at a price $4 billion below Starwood's latest offer.
Starwood shares fell 933/4 cents Wednesday to $54.311/4, while Hilton's climbed 25 cents to $31.25, also on the NYSE.
The ITT-Starwood combination would have a total of 650 hotels in 70 countries. The deal caps an aggressive expansion over the past few years that made Phoenix-based Starwood the nation's largest real estate investment trust and a stock market high-flyer.
It also made Sternlicht a rare victor over Bollenbach, whose credits include helping to keep Donald Trump out of bankruptcy and playing a key role in Walt Disney Co.'s acquisition of the ABC network.
Sternlicht said Starwood hopes to complete its purchase by February, then begin evaluating ITT's other operations outside of hotels and casinos. ITT also owns a phone directory business and technical schools. Other options may include leasing or selling some of ITT's casinos, which Starwood has no experience running.
"There's a lot of work ahead of us," he said after winning the vote. "This was the easy part."
© 2016. All Rights Reserved. | Contact Us