Allegis Will Sell Westin Hotels for $1.53 Billion : Deal With Bass Group, Japanese Firm Would Complete Restructuring
Allegis Corp., the parent company of United Airlines, said Tuesday that it will sell its Westin Hotels subsidiary for $1.53 billion, essentially completing the major restructuring of the company announced in June.
The 62-hotel worldwide chain is being bought by the Robert M. Bass Group of Fort Worth and Aoki Corp. of Japan, supported by the Industrial Bank of Japan. Of the purchase price, Allegis said, $1.35 billion will be in cash and approximately $180 million of Westin debt will be assumed by the purchasers.
Aoki is a construction company that has hotels in Brazil, Panama and Taiwan. Its Sao Paulo-based subsidiary, Caesar Park Hotels International, purchased New York’s legendary Algonquin Hotel in June. Aoki has assets of about $2 billion.
Founded in 1930
At the office of the Bass group, headed by financier Robert Bass, a secretary said that “we have standing orders never to talk to the media, so that is the quote we give to the media.” At the offices of the Bass family, a spokesman said that the other members of the family were not involved in this transaction. The reclusive family is headed by Perry, the father, and sons Robert, Sid, Edward and Lee.
“Sometimes they invest together; other times they make deals apart,” said the spokesman, Warren Woodward. The family is among the wealthiest in the United States.
Westin Hotels & Resorts, founded in 1930 by six hotel operators who formed Western Hotels to manage 17 in the Pacific Northwest, was bought by UAL Inc., which Allegis was then called, in 1970. Based in Seattle, it owns some of its hotels and manages others, but the company will not give a breakdown.
Westin hotels in California include the Century Plaza and Bonaventure Hotels in Los Angeles, the Westin South Coast Plaza in Orange County and the Westin St. Francis in San Francisco.
When it announced its restructuring, Allegis said it planned to dispose of its Hertz car rental business, which it had owned since 1985, and the Hilton International hotel chain, which it had owned for just a few months. It also said it would change its name to United Airlines Inc.
The company became Allegis last February, when Chairman Richard J. Ferris embarked on a plan to change its image from merely an airline company to a travel-services conglomerate.
But the plan met with strong disapproval from shareholders, and Ferris and about 20 other senior officer resigned.
Frank A. Olson, who had headed Hertz before it was purchased by United, succeeded Ferris as chairman and chief executive. However, when the Hertz sale was announced recently, Olson said he would return to the car rental company. Allegis is now seeking a chief executive, and a choice could be announced as early as Thursday when a regularly scheduled board meeting is held.
Allegis has said that also plans to sell up to 49% of its Covina/Apollo computer reservations system. It said Tuesday that negotiations toward that end are under way.
The closing of the sale of Hilton International to Ladbroke Group of Great Britain for $1.07 billion took place on Oct. 14. The Hertz sale to an investment group headed by Olson, other Hertz management people and the Ford Motor Co. for $1.3 billion is expected to close by the end of the year.
Allegis said it was its intention to distribute the net proceeds of the sales, after taxes and expenses, to shareholders. These shareholders will then also retain their shares in Allegis, which will consist largely of United Airlines.
Analysts said the price Allegis will receive for Westin is more than adequate. “We had been looking for between $1.2 billion and $1.7 billion,” said Edward Starkman, airline analyst with the New York brokerage house of Paine Webber. “They were anxious to get it done. They want to make the payout and to get moving again.”
Starkman said shareholders can expect as much as a $67 payout, based on the company’s 57 million common shares outstanding. But he added that due to the stock market crash, like many other companies, Allegis had bought back some of its own shares.
Starkman said Allegis can expect to get a good price for its half of the computer system. He said it was much more sophisticated and had greater market penetration than Trans World Airlines’ Pars computer system. Half of that was sold recently to Northwest Airlines for $200 million.
Paul Karos, airline analyst with L. F. Rothschild, Unterberg, Towbin, a New York stock brokerage, said the total value of the company stock is between $80 and $90 a share. He said stockholders can expect about $60 a share in the payout and that the remaining airline stock would be worth as much as between $20 and $25 per share.
Allegis stock closed Tuesday at $71, up $9.50.
WESTIN’S WORLDWIDE PROPERTIES UNITED STATES
Peachtree Plaza, Atlanta
Copley Place, Boston
Westin Downtown Chicago
Westin Hare Airport
Westin Cincinnati
Dallas Galleria
Tabor Center, Denver
Renaissance Center, Detroit
Paso del Norte, El Paso
Cypress Creek, Fort Lauderdale
Mauna Kea, Hawaii
Westin Kauai
Westin Maui
Houston Galleria
The Oaks, Houston
Westin Indianapolis (late 1988)
Crown Center, Kansas City, Mo.
Century Plaza, Los Angeles
Bonaventure, Los Angeles
Canal Place, New Orleans
Plaza, New York
South Coast Plaza, Costa Mesa
Arizona Biltmore
William Penn, Pittsburgh
Benson, Portland, Ore.
Westin San Francisco Airport
St. Francis, San Francisco
Westin Seattle
Westin Stamford, Conn.
La Paloma, Tucson
Williams Center, Tulsa
Westin Vail, Colo.
Westin Washington, D.C.
CANADA
Westin Calgary
Westin Edmonton
Westin Ottawa
Harbour Castle, Toronto
Bayshore, Vancouver
Westin Winnipeg
EL SALVADOR
Camino Real, San Salvador
GUATEMALA
Camino Real, Guatemala City
HONG KONG
Shangri-La, Kowloon
JAPAN
Miyako, Kyoto
Takara-ga-Ike Prince, Kyoto
Akasaka Prince, Tokyo
Tokyo Prince
KOREA
Chosun Beach, Pusan
Westin Chosun, Seoul
MEXICO
Las Brisas, Acapulco
Camino Real, Cancun
Camino Real, Ixtapa
Las Hadas, Manzanillo
Camino Real, Mazatlan
Camino Real, Mexico City
Galeria Plaza, Mexico City
Ambassador, Monterrey
Camino Real, Puerto Vallarta
Camino Real, Saltillo
PHILIPPINES
Philippine Plaza, Manila
Westin Stamford, Manila
SINGAPORE
Westin Plaza, Raffles City
Westin Stamford, Raffles City
SOUTH AFRICA
The Carlton, Johannesburg
Source: Westin Hotels & Resorts
