ITT Considers Breaking Up to Attract Investors

ITT Corp., the symbol of a conglomerate for 20 years, said Wednesday that it may split into smaller pieces to make itself more attractive to investors.

The news sent its shares soaring $5.375 to $65.375 on the New York Stock Exchange. Wall Street experts estimated ITT’s breakup value at between $80 and $90 a share.

The company, which is involved in insurance, electronics, auto parts, hotels, pulp and consumer lending, said it was considering the “theoretical option” of splitting up in a bid to boost its stock performance.

ITT said the possibilities include spinning off its Sheraton hotel unit and financial services business from its manufacturing businesses. Sheraton has 500 hotels worldwide. ITT also owns the Hartford Insurance group.

A company spokesman said ITT Chairman Rand Araskog and the board would like to see the company’s stock price increase so stockholders are “rewarded more than they have been.”

However, the company had not gone beyond the preliminary stage, the official said.

The conglomerate reported lower profit in 1991--$817 million against $958 million in 1990.

In the 1970s, the telecommunications equipment maker acquired the reputation of a big-time conglomerate by taking over an assortment of non-related companies.

In an interview in Wednesday’s Financial Times, Araskog complained that ITT’s stock, which closed Tuesday at $60 a share, was undervalued. It could trade at $80 or more “if we get a little perception change,” he said.

Wall Street analysts said the company may have plans to change the way it does business.

“I think it is unlikely we’ll see any (restructuring moves) near-term, but there appears to be a fundamental shift in the thinking of ITT’s management with regard to the company. They’re more focused on stock price than they were,” said Goldman Sachs analyst Jack Kelley.

“Over the last several years, other companies have continued to restructure and enhance shareholder value, and ITT has lagged. Now it appears ITT is more willing to consider restructuring,” Kelley said.

Stock speculators said they expect ITT to be serious in its pursuit of higher stock value. They pointed to a proposed change in the company’s compensation plan for managers that ties pay more closely to stock performance.

Araskog won the dubious distinction of being the fourth-highest-paid U.S. executive in 1990, according to Financial World magazine--with compensation of $11.47 million--even as the company’s earnings fell.