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LAS VEGAS A Nevada judge's ruling late last month has shifted momentum in favor of Hilton Hotels Corp.'s bid to acquire ITT Corp. U.S. District Judge Philip Pro blocked IT's plan to split into three separate companies, unless the split is approved by ITT shareholders. The ruling forces ITT to put the issue before shareholders at their meeting early next month.
The judge's ruling caught many lodging industry insiders by surprise. One analyst had put the odds at 9 to 1 in favor of ITT getting a favorable ruling.
There is some speculation that the judge's ruling was less about legal precedent than about dissatisfaction with the possibility that IT's spun-off hotel operations would have staggered terms for its board of directors. That board would oversee the newly formed company after the proposed spin-off was complete. Apparently, the judge viewed the situation as nothing more than entrenchment by management.
Hilton's advantage could be short lived, however, since there are still many options available to ITT in its effort to thwart the takeover.
Taken to an extreme, IIT could leverage the substantial amounts of cash it has accumulated by selling off non-core assets and...