The Hilton/ITT Wars

Group 10
Why did Bollenbach open his bidding for ITT at $55 per share? What
was his likely strategy?

• 29% premium over the current share price

($43)
 Why did Bollenbach not raise the
bid between January and July?
• Update the analysis to reflect recent
events and ITT’s press releases
• Expected to win the case to force ITT to
hold its AGM in May
• EVNT
What is the stand-alone value of ITT’s equity? How did this compare to
ITT’s historical market value? What was ITT’s “break-up” value? What
was ITT’s value to Hilton?
Stand Alone Value  
Value of Equity without Synergies $6,757
Per Share Value of Equity without Synergy $58.07
Per Share Historical Market Value $43-$63.50
Break up value  
Lodging $6,000
Gaming $2,800
Information Services  
Education $425
Directories $1,050
Entertainment  
MSG $500
WBIS $104
ITT's value to Hilton  
Value of Equity with Synergy $7,906
Per Share Value of Equity with Synergy $67.94
 What do you expect the price of ITT’s equity would be if Hilton’s bid
fails? Would it collapse to its pre-tender offer trading value of around
$44? Would it remain stable at its existing level of around $60, or would
it rise to meet ITT’s share repurchase price of $70?

• Remain stable at its existing level - $63

• Share repurchase – strategy for take over
defense and it is at premium
 At what bid would risk arbitrageurs be inclined to tender
their shares to Hilton? How much do they expect to earn
from waiting for a new bid? What other underlying
assumptions are you making in drawing this conclusion?

• Arbitrageurs will tender shares to Hilton at

a share price above $70
• No competitive bids above $70
• No white knights
 How should Bollenbach react to ITT’s trivestiture
defense? Should he change the bid or walk away?

• Elect Hilton nominees to ITT Board – to

rescind the poison pill
• Maximum bid offer at around $75 - $80
• Else walk away