Hilton asks court
Bloomberg News
to block ITTplanWASHINGTON -- Hilton Hotels Corp., which proposed in January a hostile takeover of ITT Corp., asked a federal court today to block ITT from its plan to break into three companies. The ITT plan ignores the interests of shareholders, who should be allowed to vote on the spinoffs, Hilton said. ITT, parent company of Sheraton hotels, announced the plan last month as part of its strategy to thwart Hilton's takeover bid.
If carried out, the plan would make the assets harder for Hilton to acquire.
Beverly Hills, Calif.-based Hilton put the fate of its $70-a-share bid for ITT in the court's hands, saying it won't pursue the $11.5 billion takeover if it fails to block ITT's plan to break up, buy back a quarter of its shares, and take on $2 billion of new debt.
Under the plan, New York City-based ITT would spin off its Sheraton hotels and Caesars World casinos into a new company armored with staggered board terms and a poison pill of a potential $1.26 billion tax liability.
In its motion in the U.S. District Court in Nevada, Hilton said ITT shouldn't be allowed to spin off 93 percent of its assets and 87 percent of its revenue into a new company with the same management and board, before holding a shareholder meeting.
"The (breakup) plan strips the shareholders of their right to replace the incumbent directors, subjects ITT and its shareholders to the risk of a massive tax liability, transforms ITT into a junk-bond credit and impairs ITT's ability to compete in the marketplace," Hilton argued.
Hilton submitted a copy of the court filing in a Schedule 14-D submitted yesterday to the Securities and Exchange Commission.
The motion asked the federal court to block the breakup plan, find that ITT's board breached its fiduciary responsibility to stockholders, require a stockholder vote before executing the plan, and force ITT to hold its annual meeting by Nov. 14.
ITT officials couldn't be reached for comment.
In trading on the New York Stock Exchange, Hilton shares closed today at $30.3775, up 18.75 cents. ITTshares closed at $63.125, down 43.75 cents.
