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ITT CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
HILTON HOTELS CORPORATION
HLT CORPORATION
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TO ALL ITT CORPORATION SHAREHOLDERS:
THERE IS NO AUCTION
AFTER NOVEMBER 12TH!
IF HILTON'S NOMINEES ARE NOT ELECTED,
HILTON'S OFFER IS GONE.
Over the last nine months, the board and management of ITT
Corporation has done everything in its power to avoid selling the
Company. If Rand Araskog and his directors had their way, ITT
would never be sold.
It was only a few weeks ago that the incumbent board and
management tried to cram down ITT's inferior "Comprehensive Plan"
without seeking ITT shareholder approval. Remember what the
Nevada Federal Court concluded about ITT's attempts to evade
Hilton and the ITT shareholders with its "Comprehensive Plan":
"IT HAS AS ITS PRIMARY PURPOSE THE
ENTRENCHMENT OF THE INCUMBENT ITT BOARD"1
Now the same ITT Board is urging shareholders to vote for ITT's
slate of directors so that ITT can hold an "auction" of the
Company. But, if the incumbent directors are elected at the
November 12th Annual Meeting there will be no auction and no
Hilton offer. How can you even be sure ITT would complete the
proposed Starwood sale?
ITT now seeks to take credit for value created by Hilton's offer,
despite having fought it every step of the way. VALUE HAS BEEN
CREATED IN SPITE OF THE ITT BOARD. It was only THE EFFORTS OF
HILTON and THE DECISION OF THE UNITED STATED DISTRICT COURT IN
NEVADA that prevented ITT from depriving shareholders of your
right to vote to determine the future of your company.
TRUSTING ITT IS A GAMBLE
PLEASE VOTE THE WHITE PROXY CARD TODAY!
Elect Hilton's Nominees on November 12 For A Board
That Is Truly Committed To Selling ITT
IMPORTANT
DO NOT DELAY! Vote the WHITE proxy card as soon as you receive it.
REMEMBER--Tuesday the 11th of November is a U.S. post office
holiday with no regularly scheduled mail deliveries. TO BE SURE
YOUR PROXY IS RECEIVED IN TIME PLEASE USE EXPRESS MAIL, FEDEX, OR
UPS NEXT DAY MAIL. If you have any questions or need assistance
in completing the WHITE proxy card, please contact:
[LOGO OF 156 Fifth Avenue, New York, New York 10010
MACKENZIE (212) 929-5500 (call collect)
PARTNERS, INC.] or
CALL TOLL-FREE (800) 322-2885
[LOGO OF
HILTON
HOTELS CORPORATION]
1 Hilton Hotels Corporation and HLT Corporation vs. ITT
Corporation, United States District Court, District of Nevada
LEXIS 15707, p.28. (October 2, 1997, PMP).<PAGE>
TO ALL ITT CORPORATION SHAREHOLDERS:
NOW IS THE TIME TO CHOOSE
After nine months of being stiff-armed by ITT's incumbent
Board, you finally have the right to choose. The incumbent
directors took every step possible to deprive you of this vote,
but thanks to Hilton's efforts, the choice is now yours.
HILTON'S OFFER IS SUPERIOR
Hilton's $80 offer is far superior to the ITT/Starwood recap
plan. With Hilton's offer you get:
MORE CASH: $2.2 BILLION MORE. And soon--WITHIN 10 DAYS
AFTER THE ELECTION. With ITT/Starwood, you'll see nothing
for months, if ever.
MORE CERTAINTY: Hilton is committed to A QUICK CLOSING.
The ITT/Starwood plan has significant regulatory hurdles
and is conditioned on the validity of Starwood's
questionable tax breaks--tax breaks that Congress plans to
review. And then there's the "ITT factor"--ARE YOU REALLY
CONVINCED THE INCUMBENT BOARD WILL CLOSE?
MORE VALUE: In addition to more cash, you get SHARES IN A
POWERHOUSE COMPANY--the world's largest lodging and gaming
company--and share value protected by CVPs. With ITT/
Starwood, you get a thinly-traded, high multiple stock, in
a company consisting of more than two thirds of assets you
already own. Isn't this just an ITT acquisition of
Starwood--at an inflated price?
TAX FREE STOCK: Hilton will restructure its second step
merger so that THE SHARES YOU RECEIVE WILL BE TAX FREE.
Shareholders who prefer tax free treatment can choose TAX
FREE SHARES, WITH PROTECTED SHARE VALUE, leaving EVEN MORE
CASH FOR THOSE WHO PREFER IT. With ITT/Starwood, all the
stock you receive is taxable--YOU MIGHT NOT EVEN GET
ENOUGH CASH TO PAY YOUR TAXES.
THERE IS NO AUCTION AFTER NOVEMBER 12TH
An auction? A "special committee"? Nine months after Hilton
began its offer, four months after the incumbent Board tried to
end run ITT shareholders with their illegal "comprehensive
plan," three weeks after the incumbents committed over $250
million of break-up fees to Starwood without even speaking with
Hilton? And only a few days prior to the election? DO YOU
REALLY BELIEVE IT? We don't, and we won't play this game. IF
THE INCUMBENT ITT DIRECTORS ARE REELECTED, THE HILTON OFFER IS
GONE.
THE CHOICE IS NOW!
PLEASE VOTE THE WHITE PROXY CARD TODAY
IMPORTANT
DO NOT DELAY! Vote the WHITE proxy card as soon as you receive
it. REMEMBER--Tuesday the 11th of November is a U.S. post
office holiday with no regularly scheduled mail deliveries. TO
BE SURE YOUR PROXY IS RECEIVED IN TIME PLEASE USE EXPRESS MAIL,
FEDEX, OR UPS NEXT DAY MAIL. If you have any questions or need
assistance in completing the WHITE proxy card, please contact:
[LOGO OF 156 Fifth Avenue, New York, New York 10010
MACKENZIE (212) 929-5500 (call collect)
PARTNERS, INC.] or
CALL TOLL-FREE (800) 322-2885
[LOGO OF HILTON HOTELS CORPORATION]<PAGE>
[LOGO OF HILTON HOTELS CORPORATION]
Contacts:
Marc A. Grossman
Sr. Vice President - Corporate Affairs
In New York 11/10
212-371-5999
Joele Frank
Abernathy MacGregor Group
212-371-5999
FOR IMMEDIATE RELEASE
HILTON SAYS ITS $80 OFFER FOR ITT IS STILL SUPERIOR TO
STARWOOD'S BID; HILTON IRREVOCABLY AMENDS OFFER
TO PROVIDE FOR AUTOMATIC TERMINATION IF INCUMBENT
DIRECTORS REELECTED
Beverly Hills, Calif., November 10, 1997 Hilton Hotels
Corporation (NYSE:HLT) announced today that it will not revise its
$80 per share offer for ITT Corporation (NYSE:ITT). Hilton urges
ITT shareholders to accept the offer by electing Hilton's nominees
to replace the incumbent directors on November 12. After
carefully examining Starwood Lodging's latest risky and uncertain
proposal for ITT, announced last Friday, Hilton remains convinced
that Hilton's $80 offer is clearly superior.
Hilton also announced that it has irrevocably amended its
$80 tender offer to provide that the offer will automatically
terminate if a majority of ITT's incumbent directors are
reelected.
"Hilton's offer will provide ITT shareholders with $5.2
billion in cash, within days," said Stephen F. Bollenbach,
president and chief executive officer of Hilton. "That's over $2.2
billion more than Starwood is proposing to pay several months from
now, if the Starwood proposal is completed at all."
In addition, Hilton will provide ITT shareholders with
two Hilton shares for each ITT share exchanged in Hilton's second-
step merger, together with contingent value preferred shares. The
contingent value shares guarantee that the Hilton shares will be
worth $80 per ITT share within one year (so long as Hilton's stock
price is at least $28).
Hilton also announced that, if the Hilton nominees are
elected, Hilton intends to restructure its second-step merger so
that the Hilton common stock received by ITT shareholders in the
merger would be tax-free. This will permit ITT shareholders who
desire this tax-free treatment for all their ITT shares to
exchange their shares in the merger, rather than tendering into
the cash tender offer. Hilton noted that the Starwood proposal,
in contrast, would be fully taxable.
- more -
WORLD HEADQUARTERS
9336 Civic Center Drive, Beverly Hills, California 90210
Telephone 310-278-4321 Reservations 1-800-HILTONS
<PAGE>
-2-
Mr. Bollenbach said, "We fought for nine months to give
ITT shareholders this choice, a choice that the incumbent
directors fought equally hard to deny them. We have every
confidence that ITT shareholders will make the right decision to
elect our nominees and accept our offer. In contrast, the
incumbent board has done everything in its power to prevent Hilton
from acquiring ITT. We know that we will never win any 'auction'
if the incumbent directors are reelected. I will not allow Hilton
to be dragged through such a process."
Mr. Bollenbach added, "The ITT shareholders now have a
very clear choice. They can accept our offer on November 12 by
electing the Hilton nominees. Or they can roll the dice with an
incumbent board that has shown them nothing but contempt, and a
risky, <PAGE>
uncertain Starwood proposal that may or may not ever be completed.
We believe the choice is obvious."
# # #
Note to editors: Full text of Mr. Bollenbach's letter to ITT
shareholders is attached.
Note to editors: There will be a media conference call November
10, 1997 at 12:00 p.m. EST, memorandum is attached.
<PAGE>
[LOGO OF HILTON HOTELS CORPORATION]
November 10, 1997
Dear ITT Shareholder:
In just two days, on November 12, you will have a clear
choice. On that day you will finally have the chance, for the
first and only time, to accept Hilton's $80 per share offer for
ITT by electing Hilton's nominees to the ITT board. If you elect
the Hilton slate, Hilton expects to complete its $80 per share
tender offer for 65 million ITT shares, about 55.5% of the
outstanding shares, within 10 days after the election. We expect
to complete our second-step merger for the remaining ITT shares
within 90 days thereafter.
Hilton has fought long and hard to give you this choice.
We trust you to make it fairly. If you vote to accept our offer
by electing our nominees, we pledge to close our offer quickly.
If you vote to reject our offer by reelecting the incumbent
directors, our offer will terminate automatically.
When you make this choice, we ask you to remember that
the incumbent ITT directors embraced a proposal from Starwood
three weeks ago, without ever having even talked to Hilton, as
part of their self-proclaimed "war" to defeat the Hilton offer.
Starwood in effect admitted last Friday that its purported $82
proposal, which the incumbent ITT directors accepted, was inferior
to Hilton's $80 offer. On Friday, Starwood tried to address its
inferiority by making a purported $85 proposal. But significant
risks and uncertainties make the value of this latest proposal far
lower than its nominal price.
Hilton is convinced that its $80 offer is still clearly
superior to the Starwood proposal. Hilton's offer will provide
ITT shareholders with over $2.2 billion more cash than Starwood's
proposal, and will be paid months sooner. Indeed, the Starwood
proposal might never be completed at all. The value of the Hilton
shares to be issued in Hilton's second-step merger will be
protected by contingent value preferred stock, a protection that
Starwood has refused to provide for the Starwood shares it
proposes to issue.
Starwood's merger proposal remains subject to a number of
material conditions to closing. In addition to requiring
regulatory approvals, third-party consents and the
approval of both ITT's and Starwood's shareholders, the Starwood
merger proposal may be called off by either Starwood or ITT if
there is "any federal legislative or regulatory change" that would
cause Starwood to lose its controversial grandfathered "paired-
share" tax status. ITT may also call off the proposed merger if
Starwood's counsel does not deliver a legal opinion stating that
the merger, and other transactions contemplated by the Starwood
merger agreement, would not cause Starwood to lose its
grandfathered paired-share status. These conditions leave
substantial doubt as to whether the Starwood proposal will ever be
completed.
WORLD HEADQUARTERS
9336 Civic Center Drive, Beverly Hills, California 90210
Telephone 310-278-4321 Reservations 1-800-HILTONS
<PAGE>
ITT Shareholders
November 10, 1997
Page Two
As you probably know, Starwood's "paired-share" tax status
is coming under increasing Congressional and IRS scrutiny. The
Starwood proposal for ITT has put a spotlight on the very real
question of whether there can be any justification for the tax
advantages given to the handful of existing paired-share REITs.
For example, Lee Sheppard, an independent tax commentator, notes
that Starwood's substantial acquisition activity could jeopardize
its tax status, given that "Congress could not have meant to permit
expansion when it grandfathered paired-share REITs." 1 Ms. Sheppard
also points out that Starwood's failure to qualify as a REIT from
1991 through 1994 could cause it to lose the grandfathering of its
paired-share structure.
ITT's incumbent directors are now campaigning on the
theory that, if reelected, they will conduct an "auction" for the
company. They would have you believe that they have suddenly
gotten religion, just days before the vote they fought so hard to
deny you. They must think there is no limit to the number of
times they can try to fool you. This is the same board that
postponed ITT's annual meeting to allow shareholders to make a
"more informed" decision, and then used the extra time to construct
a plan to prevent you from having any decision. This is the same
board that was found by the Nevada federal court to have acted to
entrench themselves and deprive you of your vote. The court had
to issue an injunction to stop them.
We are absolutely convinced that, if the incumbent
directors are reelected, Hilton will never win any "auction" for
ITT. I will accept the judgment of the ITT shareholders on our
$80 offer. I will not accept the judgment of an incumbent board
that has done everything in its power for the last nine months to
prevent Hilton from acquiring ITT. This is why Hilton has amended
its offer so that the offer will terminate automatically if you
reelect a majority of the incumbent ITT directors.
The choice is clear. We ask you to choose now.
Sincerely,
/s/ Stephen F. Bollenbach
Stephen F. Bollenbach
________________________________________________________________________________
1 Lee A. Sheppard, "Is ITT's White Knight a Giant Tax Shelter?"
Highlights and Documents (November 7, 1997), at 1965. Permission
of author for citation neither requested nor obtained.
