ITT in Talks to Take Over Bally, Source Says
ITT Corp. is in takeover talks with Bally Entertainment Corp., a move that would bring five casinos to the owner of Caesars World, a source with knowledge of the negotiations said Tuesday.
An analyst who follows the two companies estimated ITT would have to pay $2.6 billion to $2.8 billion for Bally. Spokesmen for both companies declined to comment.
The source, who spoke on condition of anonymity, said the talks were taking place at high levels in both companies.
The New York Times reported in today’s editions that in addition to ITT, Los Angeles-based Hilton Hotels Corp. is also in talks to merge with Bally.
News of the talks boosted Bally stock more than 20%. ITT stock also rose.
Both ITT and Bally have undergone face-lifts in the last six months, and a deal would make good on the intentions of both reorganizations.
In September, ITT’s shareholders voted to split the former conglomerate into three independent companies: ITT Industries, insurer ITT Hartford and a new ITT Corp., which includes gambling, hotel and entertainment businesses.
In January, Bally completed the sale of its health clubs, a move announced in 1994 when the Chicago-based company said it wanted to concentrate on the hotel and casino operations.
In a weekly gaming report issued Monday, Dean Witter Reynolds analyst Joseph Coccimiglio speculated that Bally would be “a good fit” if ITT was seeking a gaming acquisition.
In Atlantic City, N.J., Caesars and Bally’s Park Place are neighbors and Bally’s owns the land that is blocking Caesars’ planned 608-room expansion, he said. In Las Vegas, Caesars Palace and Bally’s hotel and casino are cater-corner from one another and could be marketed together.
ITT, with projected revenue of more than $6 billion this year, has up to $3 billion in available credit, Coccimiglio said.
“They’re a growth company. They’re very aggressive,” he said. ITT President Robert A. Bowman “is definitely someone who is not afraid to pull the trigger. They’ve done it before.”
In January 1995, ITT paid $1.7 billion for Caesars World Inc., which owns hotel-casinos in Las Vegas, Lake Tahoe and Atlantic City. ITT also operates the Desert Inn in Las Vegas and the Sheraton Casino in Tunica, Miss., as well as casinos in Canada, Peru, Australia and Egypt.
ITT owns the Sheraton and Cigna hotel chains and a half interest in the Madison Square Garden sports and theater complex and two New York sports teams, the Knicks of the National Basketball Assn. and the Rangers of the National Hockey League. Revenue is expected to exceed $6 billion this year.
In addition to its Las Vegas casino, Bally Entertainment Corp. owns the Park Place and the Grand in Atlantic City. It has a riverboat casino in New Orleans and a dockside casino in Mississippi.
It also announced last year that it planned to build a $420-million Paris-themed resort in Las Vegas by late 1997.
Bally rose $3.625 to $21.625 per share on the New York Stock Exchange. ITT stock gained $1.50 to close at $62.625 on the NYSE.
At $25 per share, a buyout would be worth close to $2.8 billion, Coccimiglio said.
