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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
(Amendment No. 34)
SOLICITATION/RECOMMENDATION STATEMENT
Pursuant to Section 14(d)(4)
of the Securities Exchange Act of 1934
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ITT CORPORATION
(Name of Subject Company)
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ITT CORPORATION
(Name of Person(s) Filing Statement)
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Common Stock, no par value
(including the associated Series A Participating Cumulative
Preferred Stock Purchase Rights)
(Title of Class of Securities)
450912 10 0
(CUSIP Number of Class of Securities)
RICHARD S. WARD, Esq.
Executive Vice President,
General Counsel and Corporate Secretary
ITT Corporation
1330 Avenue of the Americas
New York, NY 10019-5490
(212) 258-1000
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)
With a copy to:
PHILIP A. GELSTON, Esq.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
(212) 474-1000
<PAGE>
INTRODUCTION
The Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") originally filed on February 12, 1997, by ITT
Corporation, a Nevada corporation (the "Company"), relates to an offer by
HLT Corporation, a Delaware corporation ("HLT") and a wholly owned
subsidiary of Hilton Hotels Corporation, a Delaware corporation ("Hilton"),
to purchase 61,145,475 shares of the common stock, no par value (including
the associated Series A Participating Cumulative Preferred Stock Purchase
Rights), of the Company. All capitalized terms used herein without
definition have the respective meanings set forth in the Schedule 14D-9.
Item 8. Additional Information to Be Furnished.
On August 7, 1997, plaintiffs in the purported class action suit
captioned Taub, et. al. v. Araskog, et. al., CV-S-97-00106, filed a
Supplemental Memorandum of Points and Authorities in Response to ITT's
Request for Declaratory Judgment (the "Taub Supplemental Memorandum"),
pursuant to which such plaintiffs informed the Nevada Federal Court that
they were no longer able to state unequivocally that, when the revised
Hilton Offer is compared to the Comprehensive Plan, the Comprehensive Plan
better serves the interests of the Company's shareholders. A copy of the
Taub Supplemental Memorandum is filed as Exhibit 99 hereto and is
incorporated herein by reference.
On September 10, 1997, the Nevada Federal Court entered an order (the
"September 10th Order") granting in part and denying in part the Company's
Motion to Dismiss Counts III through VII of Hilton's First Amended and
Supplemental Complaint or, in the Alternative, for Partial Summary
Judgment. A copy of the September 10th Order is filed as Exhibit 100 hereto
and is incorporated herein by reference.
On September 25, 1997, the Company announced the extension of its
previously announced Debt Tender Offer. The Debt Tender Offer is now
scheduled to expire at 5:00 p.m., New York City time, on Thursday, October
2, 1997, unless extended. A copy of a press release announcing the
extension of the Debt Tender Offer is filed as Exhibit 101 hereto and is
incorporated herein by reference.
<PAGE>
Item 9. Exhibits.
The response to Item 9 is hereby amended by adding the following
new Exhibits:
99. ITT Shareholder Plaintiff's Supplemental Memorandum of Points and
Authorities in Response to ITT Corporation's Request for
Declaratory Relief (filed in Taub, et. al. v. Araskog, et. al.,
CV-S-97-00106) dated August 7, 1997.
100. Order of the Nevada Federal Court dated September 10, 1997.
101. Text of Press Release issued by the Company dated September 25,
1997.
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete
and correct.
ITT CORPORATION
By /s/ RICHARD S. WARD
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Name: Richard S. Ward
Title: Executive Vice President,
General Counsel and
Corporate Secretary
Dated as of September 26, 1997
<PAGE>
EXHIBIT INDEX
Exhibit Description Page No.
(99) ITT Shareholder Plaintiff's Supplemental
Memorandum of Points and Authorities in
Response to ITT Corporation's Request for
Declaratory Relief (filed in Taub, et.
al. v. Araskog, et. al., CV-S-97-00106)
dated August 7, 1997..........................
(100) Order of the Nevada Federal Court dated
September 10, 1997............................
(101) Text of Press Release issued by the Company
dated September 25, 1997......................
<PAGE>
[Exhibit 99]
ALBRIGHT, STODDARD, WARNICK
& ALBRIGHT
G. MARK ALBRIGHT
Nevada Bar No. 001394
WILLIAM H. STODDARD, ESQ.
Nevada Bar No. 001477
Quail Park Suite D-4
801 South Rancho Drive
Las Vegas, NV 89106
Telephone: (702) 384-7111
Counsel for ITT Corporation Shareholder Plaintiffs
[Additional counsel appear on signature page.]
UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA
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ITT CORPORATION, BETTE B. ANDERSON, Civil Action No.
RAND V. AROSKOG, NOLAN D. ARCHIBALD, CV-S-97-00893-DWH
ROBERT A. BOWMAN, ROBERT A. BURNETT, (RLH)
PAUL . KIRK, JR., EDWARD C. MEYER,
BENJAMIN F. PAYTON, VIN WEBER,
MARGITA E. WHITE, and KENDRICK R.
WILSON, III,
Plaintiffs,
-vs.-
HILTON HOTELS CORPORATION and HLT
CORPORATION,
Defendants.
- -----------------------------------
ITT SHAREHOLDER PLAINTIFFS' SUPPLEMENTAL MEMORANDUM OF
POINTS AND AUTHORITIES IN RESPONSE TO ITT CORPORATION'S
REQUEST FOR DECLARATORY RELIEF
Plaintiffs in the action entitled Taub, et al v. Araskog, et al,
CV-8-97-00106-HDM (LRL) pending in this district (the "Shareholder Action")
respectfully submit this memorandum to supplement their July 31, 1997
Opening
<PAGE>
Memorandum In Response to ITT Corporation's Request For Declaratory
Relief.[1] (In this memorandum, plaintiffs in the Shareholder Action are
referred to as the "ITT Shareholders"). The ITT Shareholders submit this
memorandum in light of the announcement on August 6, 1997 that Hilton
Hotels Corp. ("Hilton") increased its offer for ITT Corp. ("ITT") from $55
per share to $70 per share (the "Revised Hilton Offer").
PRELIMINARY STATEMENT
In the Shareholder Action, the ITT Shareholder Plaintiffs seek to
enjoin actions taken by the defendants to thwart a takeover offer
originally made by Hilton on January 27, 1997 (the "Original Offer") to
acquire ITT for $55 per share. The ITT Shareholder Plaintiffs allege that
defendants in the Shareholder Action were depriving ITT's shareholders of
the opportunity to realize the full benefits of their investment in ITT.
On July 15, 1997, ITT's Board of Directors approved a
comprehensive plan (the "Comprehensive Plan") that would have: (i) split
ITT into three distinct companies (the "Spinoff"); (ii) repurchased
approximately 25% of ITT's outstanding shares at $70 per share (the "Equity
- --------
[1] ITT's motion for declaratory relief was filed in ITT, et al. v.
Hilton Hotels Corp., et al., CV-S-97-00893-DWH (RLH).
<PAGE>
Repurchase"); and (iii) repurchased all of ITT's publicly held debt
securities. When ITT announced the Comprehensive Plan, Hilton's Original
Offer had been outstanding for six months.
On July 31, 1997 the ITT Shareholders, through their counsel,
filed a memorandum of law informing the Court that when Hilton's Original
Offer was compared to the Comprehensive Plan, they considered the
Comprehensive Plan to better serve the interest of ITT's shareholders.
Hilton's Revised Offer of $70 per share represents a 64% premium over ITT's
stock price before Hilton announced the Original Offer of $55 per share in
January, 1997. The Revised Offer fundamentally alters the comparison of the
rival proposals of ITT and Hilton. As a result, the ITT Shareholders want
to -- and also believe that ITT's board must -- fully assess Hilton's
Revised Offer.[2] The ITT Shareholders are no longer able to unequivocally
say that the Comprehensive Plan better serves the interests of ITT's
shareholders when compared to the Hilton Revised Offer.
STATEMENT OF FACTS
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[2] Indeed the ITT Shareholders believe that the shareholders of ITT
would be best served if ITT representatives met with Hilton representatives
so that they may be fully informed about Hilton's Revised Offer with the
hope that some agreement may result which benefits the ITT Shareholders.
<PAGE>
The opening memorandum submitted by the ITT Shareholders in this
action contained a detailed statement of facts. In this memorandum only
those facts will be repeated that are necessary for a full understanding of
the ITT Shareholders' position.
1. Hilton's Tender Offer and The Shareholder Action
On January 27, 1997, Hilton announced the Original Offer,
pursuant to which Hilton would acquire 50.1% of the common stock of ITT at
a price of $55 per share, and proposed a stock merger for the rest of ITT's
common stock.
Following news of Hilton's Original Offer, the ITT Shareholders
filed the Shareholder Action (Taub, et al v. Araskog, et al.,
CV-8-97-00106-HDM (LRL)) in this Court against ITT and its officers and
directors. The ITT Shareholders allege that ITT and the individual
defendants had failed to adequately consider the Hilton Offer and were
preparing to use their positions of control over ITT to thwart legitimate
attempts to acquire ITT. Among other things, in the Shareholder action the
ITT Shareholders seek a permanent injunction preventing defendants from
depriving ITT's shareholders of their right to realize a full and fair
value for their ITT stock and compelling defendants to maximize shareholder
value. The Shareholder Action is still pending in this Court.
<PAGE>
2. ITT's Response To The Hilton Offer
At meetings of February 11, 1997 and again on July 15, 1997, the
ITT Board assessed Hilton's Original Offer and unanimously concluded that
it was inadequate and not in the best interests of ITT or its shareholders.
At the July 15, 1997 meeting, ITT's board approved the three part
Comprehensive Plan that would involve:
o the separation (the "Spinoff") of ITT into three
distinct, publicly owned companies focused on (a)
hotels and gaming; (b) telephone directories
publishing; and (c) post-secondary technical education;
o the repurchase of up to 30 million shares
(approximately 25% of the outstanding shares) at a
price of $70 per share (the "Equity Repurchase"); and
o the repurchase of all of ITT's publicly held debt
securities. Id.
3. The ITT Shareholders Favored The Comprehensive Plan Over
Hilton's Original Offer
On July 31, 1997, after reviewing the Comprehensive Plan and
comparing it to Hilton's Original Offer of $55 per share, the ITT
Shareholders filed a memorandum with this Court stating their position that
the Comprehensive Plan was superior to the $55 per share offered by Hilton.
The ITT Shareholders' position was based upon the facts as they existed on
July 30, 1997 and was without prejudice to their right to amend their
position should circumstances change. (See ITT Shareholders Opening Mem. at
5, n.3.).
<PAGE>
4. Hilton's Revised Offer And The ITT Shareholders' Reaction
The situation changed dramatically on August 6, 1996 when Hilton
announced that it was revising its offer to increase the offering price
from $55 per share to $70 per share, raising the cash and stock portion of
the bid from $6.5 billion to $8.3 billion. Including the assumption of ITT
debt, Hilton's Revised Offer is worth a total of $11.5 billion. Moreover,
Hilton's Revised Offer represents a 64% premium over ITT's stock price
before Hilton announced the Original Offer in January, 1997.
Pursuant to the Revised Offer, after Hilton's tender offer is
completed, Hilton's announced intention is to complete a second-step merger
in which remaining ITT shares would be converted into shares of Hilton
common stock with a value of $70 per share of ITT. Hilton's Revised Offer
is the exact type of change that the ITT Shareholders hoped to bring about
by supporting the Comprehensive Plan over the old $55 per share offer by
Hilton. Now, as a result of the Hilton's Revised Offer, the ITT
Shareholders can no longer support the Comprehensive Plan. Hilton's Revised
Offer dramatically changes the stakes and requires ITT's board to fully
evaluate the Revised Offer and take all appropriate steps to enhance the
value of the ITT stock held by the ITT Shareholders.
<PAGE>
CONCLUSION
For the reasons set forth above, given the Revised Offer by
Hilton, the ITT Shareholders submit that the Comprehensive Plan adopted by
ITT's Board is not clearly superior to Hilton's Revised Offer and the ITT
Shareholders request the ITT board to take further steps to insure that the
ITT Shareholders will have the opportunity to maximize the value of their
shares.
Dated: August 7, 1997
ALBRIGHT, STODDARD, WARNICK & ALBRIGHT
By: /s/ G. Mark Albright
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G. Mark Albright
Nevada Bar No. 001477
Quail Park Suite D-4
801 South Rancho Drive
Las Vegas, NV 89106
(702) 384-7111
Arthur N. Abbey
Mark C. Gardy
Stephen J. Fearon, Jr.
ABBEY, GARDY & SQUITIERI, LLP
212 East 39th Street
New York, New York 10016
(212) 889-3700
Robert A. Wallner
MILBERG WEISS BERSHAD HYNES &
LERACH LLP
One Pennsylvania Plaza
New York, New York 10119
(212) 594-5300
<PAGE>
Jeffrey G. Smith
WOLF HALDENSTEIN ADLER FREEMAN
& HERZ LLP
270 Madison Avenue
New York, New York 10016
(212) 545-4600
Stephen D. Oestreich
WOLF POPPER, LLP
845 Third Avenue
New York, New York 10022
(212) 759-4600
Counsel for ITT Shareholder
Plaintiffs
<PAGE>
CERTIFICATE OF SERVICE
I, Brandi Lujan hereby certify that on this 7 day of August,
1997, I caused a copy of the accompanying ITT Shareholder Plaintiffs'
Opening Memorandum Of Points And Authorities In Response To ITT
Corporation's Request For Declaratory Relief to be served upon defense
counsel listed below via Facsimile Transmission and Federal Express
overnight mail delivery:
Steve Morris
Kristina Pickering
SCHRECK MORRIS
1200 Bank of America Plaza
300 South Fourth Street
Las Vegas, Nevada 89101
(702) 382-8135
Bernard W. Nussbaum
Eric M. Roth
Marc Wolinsky
Scott L. Black
WACHTELL, LIPTON, ROSEN & KATZ
51 West 52nd Street
New York, New York 10019
(212) 403-2000
Thomas F. Kummer
Von S. Heinz
Seventh Floor
3800 Howard Hughes Parkway
Las Vegas, Nevada 89109
(702) 796-7181
Rory O. Millson
Sandra C. Goldstein
CRAVATH, SWAINE & MOORE
825 Eighth Avenue
New York, New York 10019
(212) 474-3700
/s/ Brandi K. Luijan
[Exhibit 100]
UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA
* * *
HILTON HOTELS CORPORATION and ) CV-S-97-095-PMP (RLH)
HLT CORPORATION, )
) O R D E R
Plaintiffs, )
)
v. )
)
ITT CORPORATION, et al., )
)
Defendants. )
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Before the Court for consideration is Defendant ITT's Motion to
Dismiss Counts III through VII of Plaintiff's First Amended and
Supplemental Complaint or, in the Alternative, for Partial Summary Judgment
(#92), filed July 2, 1997.
In its First Amended and Supplemental Complaint (#91), filed June
25, 1997, Plaintiff Hilton asserts a series of breach of fiduciary duty
claims based upon ITT's alleged breakup of the Corporation which Hilton
maintains is designed to defeat its tender offer.
ITT first argues that Hilton's claims are not ripe and that
Hilton is seeking an advisory opinion from the Court regarding certain
hypothetical transactions which would arguably breach ITT's fiduciary
duties to its shareholders. The record before the Court, however, indicates
that contracts of the type complained of by Hilton have been entered by
ITT. Discovery in this area is ongoing and the record suggests that
continued discovery is reasonably calculated to lead to the production of
admissible evidence on the issue. Under the circumstances, Hilton's claims
cannot be dismissed as unripe.
ITT next argues that Hilton's breach of fiduciary duty claims are
derivative rather than direct. Therefore, maintains ITT, Hilton's First
<PAGE>
Amended and Supplemental Complaint is deficient because it is not verified
and because it lacks particularized allegations of efforts to make a demand
on ITT's Board of Directors. The Court agrees that Hilton's breach of
fiduciary duty claims are derivative and that Hilton should be required to
verify its First Amended and Supplemental Complaint. The Court concludes,
however, that Hilton should not be required to make particularized
allegations of efforts to make a demand on the ITT Board, because it is
clear such a demand would be futile.
The Court rejects ITT's arguments that Counts III and IV of
Hilton's First Amended and Supplemental Complaint failed to state a claim.
The Court also rejects ITT's argument that Hilton's statutory claim under
NRS 78.565 as alleged in Count V of Hilton's First Amended and Supplemental
Complaint is defective. Hilton's allegation that ITT's plan of spinning off
into three distinct businesses could reasonably be found to be a breakup of
the company and a sale of substantially all of ITT's assets is sufficient
under NRS 78.565.
ITT next argues that to the extent Counts III through VII of
Hilton's First Amended and Supplemental Complaint focus on the contract
between ITT and FelCor, the claims must be dismissed for failing to join
FelCor as a necessary Defendant under Rule 19(a) of the Federal Rules of
Civil Procedure. The Court agrees that to the extent Hilton seeks
rescission of the contract between ITT and FelCor and invalidation of
certain provisions of ITT's management agreement with FelCor (Am. Cpl.
Sections 69(i) and (j)), FelCor is a necessary party under Rule 19(a).
There is, moreover, a legitimate issue as to whether this Court has federal
question or diversity jurisdiction over FelCor. The Court finds that under
the circumstances, the remedy warranted is to dismiss Hilton's claims for
relief seeking rescission of the FelCor transaction and invalidating the
change of control penalty provisions in ITT's management agreement with
FelCor.
<PAGE>
Finally, the Court finds that there exists genuine issues of
material facts regarding the claims set forth in Counts III through VII of
Hilton's First Amended and Supplemental Complaint. Therefore, partial
summary judgment is not appropriate as to those claims at this time.
IT IS THEREFORE ORDERED that Defendant ITT's Motion to Dismiss
Counts III through VII of Hilton's First Amended and Supplemental Complaint
or, in the Alternative, for Partial Summary Judgment (#92) is denied except
to the extent that Hilton's claim for relief seeking rescission of the
FelCor transaction and invalidation of the change of control penalty
provisions in ITT's Management Agreement with FelCor (Am. Cpt. Sections
69(i) and (j)) are hereby dismissed without prejudice.
IT IS FURTHER ORDERED that Hilton shall file a Verified First
Amended and Supplemental Complaint not later than September 22, 1997.
<PAGE>
IT IS FURTHER ORDERED that having reconsidered Hilton's Motion to
Unseal Hilton's Opposition to Defendant's Motion to Dismiss (#99), in light
of the Oppositions thereto filed on behalf of ITT (#106 and #109) and non-
party FelCor Suite Hotels, Inc. (#111), and Hilton's Reply Memorandum
(#116), Hilton's Motion to Unseal Hilton's Opposition to Defendant's Motion
to Dismiss (#99) is granted.
DATED: September 8, 1997
/s/ Philip M. Pro
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PHILIP M. PRO
United States District Judge
Exhibit 101
[ITT Letterhead]
DATE: September 25, 1997
CONTACT: Jim Gallagher
TELEPHONE: 212-258-1261
FOR IMMEDIATE RELEASE
ITT EXTENDS DEBT TENDER OFFER
NEW YORK, NY, September 25, 1997 - ITT announced today that it has extended
the expiration date of its offer to purchase any and all of the following
ITT Corporation debt securities; (i) $700MM 6.25% Notes due November 15,
2000; (ii) $250MM 6.75% Notes due November 15, 2003; (iii) $450MM 6.75%
Notes due November 15, 2005; (iv) $450MM 7.375% Notes due November 15,
2015; and (v) $150MM 7.75% Notes due November 15, 2025. The offer is now
scheduled to expire at 5:00 p.m., New York City time, on Thursday, October
2, 1997, unless extended. As of the close of business yesterday, (i)
approximately $256MM principal amount of the 6.25% Notes due November 15,
2000; (ii) approximately $128MM principal amount of the 6.75% Notes due
November 15, 2003; (iii) approximately $231MM principal amount of the 6.75%
Notes due November 15, 2005; (iv) approximately $200MM principal amount of
the 7.375% Notes due November 15, 2015; and (v) approximately $40MM
principal amount of the 7.75% Notes due November 15, 2025 have been
tendered in the offer. The terms and conditions of the offer are set forth
in ITT's Offer to Purchase dated August 11, 1997 and the related Letter of
Transmittal. Goldman, Sachs & Co., are acting as Dealer Managers for the
offer and Georgeson & Company, Inc. is acting as Information Agent.
ITT
