Hilton likely to raise stakes in hostile bid for ITT

      NEW YORK -- Hilton Hotels Corp. Chief Executive and President Stephen Bollenbach said Hilton is likely to increase its $10.5 billion hostile bid for ITT Corp. when ITT sets a date for its annual meeting.
      "Until there is an end in sight, there's just not much sense in us raising our price," Bollenbach told the Bloomberg Forum.
      At the annual meeting, shareholders will decide between ITT's slate of directors or Hilton's board nominees, which essentially means they're voting on whether to accept Hilton's bid.
      ITT typically holds its annual meeting in May, but says Nevada law, where it's incorporated, permits it to hold a shareholder meeting as late as November. Hilton has asked a Nevada federal court to force ITT to hold the meeting in May.
      An ITT spokesman declined to comment.
      Hilton would raise its bid if it can discuss the offer with ITT executives, something ITT has so far refused to do, Bollenbach said.
      Investors have been expecting Hilton to boost the $55-a-share offer. Since Hilton made the bid for the New York-based owner of the Sheraton hotel chain and the Caesars World casinos in January, ITT shares have traded consistently above 55.
      Bollenbach also said he expects terms of ITT's agreement last week to sell its half of New York's Madison Square Garden for $650 million to Cablevision Systems Corp. to be revised.
      Some analysts said ITT got a better-than-expected price for its stake in the New York sports arena. With shareholders putting pressure on Cablevision Chief Executive James Dolan, Cablevision can still change the terms of the transaction, Bollenbach said. The agreement is a letter of intent and isn't binding, he said.
      "He's committed to nothing," Bollenbach said. "Whether there is some change in that price, I certainly wouldn't be surprised."
      ITT's agreement with Cablevision to sell its half of Madison Square Garden -- including the New York Knicks basketball team, Rangers ice hockey team and a cable network -- is part of ITT's plan to sell assets not related to its casino and hotel businesses and focus on Sheraton and Caesars.
      Those assets include a stake in French telecommunications company Alcatel Alsthom SA, a stake in a technical school business and a telephone directory publisher.
      How much Hilton increases its offer depends on what ITT does with the proceeds, Bollenbach said.
      "They (ITT) have said they are going to sell $3 billion or $4 billion worth of assets," he said. "So it depends on what's there."
      ITT said it may use the cash to either buy back shares, distribute a special dividend to shareholders or make acquisitions for its hotel and casino businesses.
      If it invests in higher-growth casino and hotel businesses, Hilton is more likely to raise its price, investors have said.
      Bollenbach attributed the recent decline in Hilton's share price to the broader decrease in casino stocks fueled by investor concern that companies are building too many gambling halls for too few gamblers.
      Hilton shares rose 62 1/2 cents to $25.63 in trading of 518,400, less than the three-month daily average 1.29 million. In the aftermath of making the offer, Hilton shares traded as high as $30.
      ITT shares rose $1 to $60 in trading of 825,000, more than the three-month daily average of 972,000.
      To be sure, there's still a possibility that Hilton might reduce its bid. For example, Hilton would lower the total price of the offer if the company used proceeds to repurchase shares, he said.
      "That would make our price go down, because their company would be smaller," Bollenbach said.