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. Last Updated: 07/27/2016

ITT Corp. Fends Off Hilton Bid

WASHINGTON -- ITT Corp. agreed Monday to be acquired for $13.3 billion by Starwood Lodging, apparently thwarting a hostile takeover of the lodging and gaming company by Hilton Hotels Corp., and expanding one of the nation's largest hoteliers.


"It looks like management at ITT, certainly in the way they were fighting off Hilton, was looking for any alternative than to sell this company to Hilton," said Steven Hash, an analyst at Lehman Brothers Inc.


Starwood Lodging, which recently purchased Westin Hotels, is offering shareholders of New York-based ITT $15 per share in cash and $67 a share in newly issued stock in what already is the nation's largest hotel real estate investment trust. It will take on $3.5 billion in ITT debt. The price is nearly 20 percent higher than the all-cash deal valued at $11.1 billion, or $70 per share, that Hilton Hotels has offered for ITT.


The deal is expected to close in the first quarter of the new year.


Phoenix-based Starwood's bid came before ITT shareholders were to vote Nov. 12 on a management plan to split into three companies, itself an attempt to evade a Hilton takeover attempt that began in January. In reaction to a Hilton suit, a federal judge ruled earlier this month that ITT would be violating its legal duties to shareholders if it didn't put the plan to a vote.


In recent weeks, Hilton has seized upon the court ruling to launch a campaign to convince ITT shareholders to vote against management's plan to split the company and instead to approve a slate of new directors to replace the ITT board. Hilton President Stephen Bollenbach has held private meetings in an effort to woo ITT's institutional investors.


Starwood owns and manages 162 hotels in 24 countries, with the majority of them operating under a hodgepodge of brand names. ITT properties include the Sheraton hotel chain, Caesars casinos and half of Madison Square Garden.


The combined Starwood-ITT group will have more than 650 hotels in 70 countries, creating the nation's largest hotel company based on market capitalization, with revenue of more than $10 billion, industry analysts said.