Hilton Negotiating to Sell Its Atlantic City Hotel-Casino to Trump
Hilton Hotels, which has been girding for a second attempt to win a casino license from New Jersey regulators, said Thursday that it is negotiating to sell its nearly completed, $300-million Atlantic City hotel-gambling complex to New York developer-sportsman Donald Trump.
The Los Angeles-based hotel firm, which on a second front has been busy erecting defenses against a potential takeover move, indicated that prospects are good for making the sale at a “clear, short-term profit.” Although Hilton said it will continue to seek a New Jersey casino license, it noted that the potential sale would be a “prudent” alternative to the costly, time-consuming process.
Casino regulators denied Hilton a license Feb. 28 but later granted it a rehearing, set to begin April 29. In opposing the license, commissioners had criticized Hilton’s 13-year association with Sidney Korshak, a labor lawyer described by the U.S. Justice Department as “a senior adviser to organized crime groups in California, Chicago, Las Vegas and New York.”
Trump, already a partner in another new hotel-casino on the Boardwalk, confirmed Thursday that he has made an all-cash offer to Hilton. Neither he nor Hilton disclosed details of the offer.
Trump, who also owns the New Jersey Generals of the United States Football League, said in a telephone interview that he is negotiating personally with Hilton Chairman Barron Hilton, “a friend of mine and a wonderful man.” Asked when the talks began, he said: “not long ago.”
Meanwhile, the management of Las Vegas-based gambling hall operator Golden Nugget, which has offered to buy a 27.4% block of Hilton stock and is widely considered a potential uninvited suitor for control of Hilton, said it was “very shocked” at the Hilton-Trump news.
Bruce A. Levin, Golden Nugget vice president and general counsel, said one reason was that Barron Hilton had declined Golden Nugget’s earlier overture to bid on the Atlantic City hotel. He said another cause for surprise was that Hilton is “putting its tail between its legs and running away from New Jersey” without vindicating its name.
In reply to questions, Levin said that, if Trump does buy the hotel, Golden Nugget will be forced to re-evaluate Hilton’s value but that the deal “doesn’t eliminate our interest.”
John Giovenco, Hilton executive vice president-finance, said Golden Nugget was not a factor in the decision to consider selling the Atlantic City property to Trump.
Levin said Golden Nugget currently sees as its most pressing concern what he called the “shark repellent” measures proposed for Hilton’s annual meeting May 6. Several proposals to be voted on would make the firm more difficult for hostile suitors to acquire.
Golden Nugget Holds 4%
Golden Nugget at last report already has accumulated nearly 4% of Hilton’s stock. The Las Vegas casino firm offered $488 million earlier this month for the 27.4% block of Hilton stock that has been tied up for five years in a probate court fight over the estate of Conrad N. Hilton.
Levin disclosed Thursday that Golden Nugget has told James E. Bates, executor of the Conrad Hilton estate, that he should “give serious consideration” to revoking a proxy that gives Barron Hilton the right to vote the block. He added:
“We’ve made it very clear . . . that we view the shark repellent as being inadvisable and inappropriate and as producing a negative impact on the shareholders.”
Asked about any reaction he has heard from other institutions, which together hold about 50% of Hilton stock, Levin said: “Most institutions seem to indicate they’ll vote against the shark repellent, but I don’t know.”
Hilton’s Giovenco, asked the same question, said his company has been in contact with “most of our major holders” and has found “kind of a mixed bag” on its anti-takeover measures.
The measures include authorizing the issuing of more shares, both common and preferred; staggering the election of directors, and requiring a 75% vote for removal of directors or a merger.