ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Saturday, March 8, 1997 TAG: 9703100105
SECTION: BUSINESS PAGE: A-9 EDITION: METRO
DATELINE: NEW YORK
SOURCE: ASSOCIATED PRESS
ITT has something to smile about with the sale of its stake in Madison Square Garden, the best-known business it hoped to divest in an effort to fend off hostile bidder Hilton Hotels.
But despite a glitzy news conference Friday and handshakes all around, ITT remains a company under siege. It has been a bit more than a month since Hilton launched its audacious $6.5 billion bid for the owner of Sheraton hotels and Caesars casinos.
``We're in the early innings of a lengthy fight,'' said Thomas Ryan, a gaming analyst at BT Securities, a unit of Bankers Trust.
Rand Araskog, ITT chairman and chief executive, together with the chairman of buyer and partner Cablevision Systems, tried to stay away from a discussion of Hilton's bid at a media event that featured New York luminaries Gov. George Pataki and Sen. Alfonse D'Amato.
The questions, however, wouldn't go away.
On what ITT would do with the proceeds:
``I'm not going to be too flip,'' he said, ``but I'm sure we'll figure something out.''
On the timing of the Garden sale, announced Thursday evening:
It came ``because of the decision of our board of directors that they would prefer that we direct our attention primarily to our hotels and gaming businesses.''
ITT's defense strategy appears to revolve around beating Hilton to the punch. ITT Corp. is trying to slim down and focus on its main businesses. Hilton Hotels Corp. chief executive Stephen Bollenbach has suggested ITT ought to do just that - but under Hilton's control.
If Araskog can generate enthusiasm about the company on Wall Street, its stock price will rise and make Hilton's takeover more expensive. Further, getting rid of peripheral businesses ahead of time robs Hilton of the ability to sell them itself to pay back takeover-related debt.
Even Charles Dolan, Cablevision Systems Corp.'s chairman, allowed if it weren't for the Hilton bid he wouldn't have been able to immediately buy the big piece of ITT's 50 percent stake for $500 million, with an option to pick up the rest for $150 million or more.
``Certainly,'' he said, ``it would not have come at this time.''
The deal gives Cablevision, which is based in Woodbury, N.Y., 88.5 percent of Madison Square Garden right away. It was a 50-50 partner with ITT before the sale. Included in the Garden are the arena complex, the New York Knicks and Rangers, and the MSG cable television network. The assets were some of the sexiest in ITT's portfolio.
For ITT, much work remains to be done. Other noncore assets include ITT's phone directory business; its controlling stake in its vocational school business; and half of TV station WBIS+, which it recently launched with Dow Jones & Co.
It has already sold 3 million of its 7 million shares in the French telecommunication company Alcatel Alsthom for $300 million.
ITT shares rose 621/2 cents each Friday, their first chance to react to the Garden sale, closing at $58.121/2 on the New York Stock Exchange. Hilton's hostile bid works out to $55 a share. Hilton shares gained 4 percent, rising $1 to close at $26.25 on the NYSE.
Ryan figures that ITT, which is based in New York, will try to postpone its annual meeting from its usual date in May until November to give it more time to sell assets and get its stock price higher.
``The bottom line is it buys them time to grow their earnings, come up with a strategic plan and finance it,'' he said.
LENGTH: Medium: 70 linesby CNB