Hilton Open to Offers but No Deal Pending, CEO Says
Barron Hilton, who this week came into voting control of 34% of Hilton Hotels shares after a 10-year struggle over his father’s estate, said Thursday that the company would consider any purchase offers it might get.
The company’s stock price shot up $6.50 on Thursday in heavy trading on the New York Stock Exchange, ending the day at $72, a new high.
While saying no offer or negotiation was pending and that the company was “not seeking buyers,” the Hilton Hotels chairman and chief executive disclosed that investment bankers had been calling since Monday to express interest in generating a deal.
Monday’s final distribution of the approximately 13.5 million shares of Hilton Hotels by executors of founder Conrad N. Hilton’s estate had set off Wall Street predictions that control of the firm might change hands within months.
Hilton pointedly took note of that public speculation at the firm’s annual meeting Thursday, at which he presided. He told shareholders that he and the other directors had a duty to consider any offer that might enhance the value of their stock.
His remarks did nothing to throw cold water on Wall Street’s speculation about a change in control of Hilton Hotels.
Asked if he personally was encouraging or discouraging the investment bankers in seeking a buyer for the company, Hilton told a reporter that he was “neutral.” He added that he was “not opposed” to a deal and was “not particularly in favor” of one.
He stressed that any deal profitable to shareholders would profit him as well. He holds a 25% stake and has voting control over another 9% that is held in trust.
The battle over the founder’s estate, most of which was bequeathed to his Conrad N. Hilton Foundation, entered its culminating phase last November when a negotiated settlement ended a long court fight.
Under the agreement, Barron Hilton received about $334 million of the $654 million market value that the stock represented at that time. The foundation received the $320 million balance of the value.
Barron Hilton’s right to exercise an option to buy the hotel stock under his father’s will was upheld by a court in March, 1988.
Under the settlement, he received 4 million shares outright and is also entitled to 60% of the income from 6 million shares placed in his trust, for as long as he lives.
The foundation received the remaining 3.5 million shares. It is also entitled to 40% of the income from the 6 million shares in Barron Hilton’s trust. Those shares will pass to the foundation on Barron Hilton’s death or in 20 years, whichever is later.
Hilton Hotels stock was trading at about $48 a share when the settlement was made. By Wednesday it had risen to $65.50 on the NYSE, before Thursday’s big gain.
In answer to a stockholder’s question at the annual meeting, Barron Hilton revealed that under an agreement with the foundation, he is bound not to sell his own shares for less than $75 each. He said he was “comfortable” with that agreement because “we would expect to get a great deal more.”
He said the foundation had no such restrictions on its stock.
The only other question from the floor was whether the company would consider selling out to a Japanese bidder. Hilton said that if the company should make a sale, the directors would have a duty to seek the highest value.
He added that it was “not certain” that the Japanese would win out in any bidding.
In his comments to the press after the meeting, Hilton said there was “no company out there knocking on our doors” and that there have been “no negotiations whatsoever.”
Asked if the company was interested in selling individual properties, the chief executive said tax liabilities attached to such a sale would be a deterrent. He said that theoretically, however, Hilton Hotels could spin off the casino hotels in a separate concern and sell either one.