<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[_]Preliminary Proxy Statement [_]Confidential, for Use of the
[_]Definitive Proxy Statement Commission Only (as
[X]Definitive Additional Materials permitted by Rule 14a-
6(e)(2))
[_]Soliciting Material Pursuant to Section 240.14a-11 or Section 240.14a-12
ITT CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
HILTON HOTELS CORPORATION
HLT CORPORATION
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
[_]Fee paid previously with preliminary materials.
[_]Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1)Amount Previously Paid:
----------------------------------------------------------------------
(2)Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3)Filing Party:
----------------------------------------------------------------------
(4)Date Filed:
----------------------------------------------------------------------
<PAGE>
EXHIBIT B
Presentation to ITT Shareholders
[LOGO] Hilton
<PAGE>
================================================================================
We Need Your Vote Now!
================================================================================
[LOGO] Hilton
<PAGE>
THE ALTERNATIVES
================================================================================
<TABLE>
<CAPTION>
------------------------------------ -------------------------------------
A HILTON / ITT COMBINATION THE ITT "COMPREHENSIVE" PLAN
------------------------------------ -------------------------------------
<S> <C> <C>
------------------------------------ -------------------------------------
Value: o $70 per Share in Definitive Value o Uncertain Value; Market Value
- $35 in cash Expected to be in the $50s
- $35 in stock - $17.56 in cash
- Stock value protected by collar - Uncertain value of "stub" shares
- Uncertain they will do any deal
---
Securities Offered: o Stock in Largest Gaming/Lodging o Stock in Numerous Smaller Companies
Company - Levered gaming/lodging company
- Levered directories business (fire
sale to Clayton, Dubilier)
- Educational Services
Business Strategy: o Capitalize on the Upside of a Powerful o None: Takeover Defense... Expect
Hilton/ITT Combination Changes
Synergies o $100 million+ in Cost Savings/Synergies o None: Triple Overhead
Credit Characteristics: o Investment Grade o Junk
Potential Tax Liability o None o $2.8 billion: No Ruling
Management Strategy o Increase Shareholder Value o None: Entrenchment
------------------------------------ -------------------------------------
</TABLE>
[LOGO] Hilton
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
The ITT "Comprehensive" Plan...
Today's Strategy
-------
================================================================================
[LOGO] Hilton
<PAGE>
WHAT IS ITT'S LONG-TERM STRATEGY?
================================================================================
<TABLE>
<CAPTION>
1996 [ARROW TO RIGHT] HILTON [ARROW TO RIGHT] 1997
STRATEGY OFFER STRATEGY
- ----------------------------------------- -------------------------------------
<S> <C>
o Goal: To be a Diversified Hospitality o "Long-Term" Strategy Drastically
& Entertainment and Information Changed to Raise Cash as Part of
Services Company Entrenchment Defense
o Management Pursued Significant - Sale of Madison Square
Non-Core Asset Purchases Garden, Knicks and Rangers
- Purchase of Madison Square Garden, - Sale of hotels to FelCor;
Knicks and Rangers poison put change of control
provisions in many contracts
- Purchase of WBIS+
- Desert Inn deal - "Casino
- Bid for Italian directories publisher Repo"
Seat SpA
- Split-up of Company pursuant
- Planet Hollywood, major capex to "Comprehensive Plan"
o "We feel [the MSG acquisition] fits - Potential sale of premier assets
with our Sheraton operations, and
gives us a new approach with a o Change in "Long-Term" Strategy
strong partner. To suggest that Represents Adoption of Hilton's
this is capricious is an insult." Strategy
- Rand Araskog
</TABLE>
- --------------------------------------------------------------------------------
Without Hilton, What Would Their Strategy Be? ... What Will It Be?
----
- --------------------------------------------------------------------------------
[LOGO] Hilton
<PAGE>
ITT COMPREHENSIVE PLAN PROVIDES INFERIOR VALUE
================================================================================
o Multiple-Based Valuation Illustrates Inferior Value of Comprehensive Plan
Comprehensive Plan
---------------------------------
FRONT END: $70 FRONT END: $80??
-------------- -----------------
Cash............................ $17.56 $20.06
ITT Destinations(l)............. 27.74 25.24
World Directories(2)............ 3.07 3.07
Educational Services(3)......... 4.41 4.41
------ ------
Total.................. $52.78 $52.78
====== ======
o Tender Offer for 26% of Shares at $70 is Worth Only $17.56 for Each Share
o Uncertainty Regarding Value of ITT Destinations, ITT World Directories and
ITT Educational Components
- Shareholder turnover will cause downward pressure on stub values post-
spinoff
o Trading Price Subsequent to Announcement of Comprehensive Plan Incorporates
Hilton Takeover Premium
o ITT's $440 Million Gaming EBITDA Projection for 1998 is a "Pipe Dream"
(Bruce Turner - Salomon Brothers)(4)
- ---------------------------
(1) Based on Hilton's current Enterprise Value/LTM EBITDA multiple of 9.2x. LTM
data as of June 30, 1997.
(2) Value implied by Clayton, Dubilier & Rice ("CD&R") investment, after
attributing a value to the CD&R warrant with an exercise price of 150%
of the initial purchase price, assuming 20% volatility, a 5.99% risk-free
rate and a 10-year expiration.
(3) Value implied by market price of $23.43 as of October 3, 1997.
(4) Bloomberg Business News, July 25, 1997 (author's consent for citation
neither requested nor obtained).
[LOGO] Hilton
<PAGE>
THE "COMPREHENSIVE" PLAN
================================================================================
TOTAL VALUE $52.78(1)
ITT Destinations $27.74
Cash $17.56
Educational Services $ 4.41
World Directories $ 3.07
[GRAPHIC REPRESENTATION OF RESPECTIVE VALUES]
- -------------
(1) Before taking into account potential $2.8 billion tax liability.
[LOGO] Hilton
<PAGE>
LEVERAGE RESTRICTS DESTINATIONS'
ABILITY TO GROW
================================================================================
o Ability to Grow in Hotel and Gaming Industries Depends Heavily on Unit
Expansion
o High Level of Debt and Covenants Will Restrict ITT Destinations' Flexibility
o Low Cost of Capital is a Key Competitive Advantage
[LOGO] Hilton
<PAGE>
MANAGEMENT ENTRENCHMENT
================================================================================
- --------------------------------------------------------------------------------
ITT Actions Based on Management Entrenchment at the Expense of Shareholders
- --------------------------------------------------------------------------------
o Avoid Shareholder Vote on Comprehensive Plan at All Costs
o Willingness to Execute Transaction Without Tax Ruling
o Tax Pill Planted to Prevent Future Acquisition of Destinations
o Originally Proposed Staggered Board Provision
o $165 Million in Golden Parachutes for Senior Management
o Unprecedented Change of Control Provisions in New Hotel Management
Contracts
o World Directories $550 Million Junk Bond Financing One Week Prior to
Court Date
- $80 million cost to shareholders(1)
- ---------------------
(1) As compared to Hilton's or current ITT's cost of borrowing.
[LOGO] Hilton
<PAGE>
WHAT HAS ITT MANAGEMENT'S STRATEGY
MEANT FOR YOU?
================================================================================
<TABLE>
<CAPTION>
ANNUALIZED
ENTITY STRATEGY PERIOD RETURN S&P 500
- ---------------- ------------------- --------- ------------ ------------
<S> <C> <C> <C> <C>
"Old" ITT Corp. Large Conglomerate 1980-1995(1) 10.7% 11.6%
"New" ITT Corp. Hospitality & 1995-1997(2) (10.4)% 22.3%
Entertainment
and Information
Services
Post- Entrench 1997- ? ?
Comprehensive Management
Plan
</TABLE>
- ------------------------
(1) Rand Araskog became Chairman of ITT in 1980.
(2) Through January 27, 1997, the day of Hilton's initial bid.
[LOGO] Hilton
<PAGE>
HILTON IS DRIVING ITT'S STOCK PRICE
================================================================================
ITT's Stock Price
1/27/97: Hilton offer announced
7/16/97: Comprehensive plan announced
Market better understands ITT's plan
8/6/97: Hilton increases its bid to $70 per share
9/12/97: Market lowers Hilton's chances of success
9/30/97: Hilton court victory
[GRAPHIC CHART REPRESENTING ITT'S STOCK PRICES AT GIVEN DATES]
ITT Stock Price LTM
[LOGO] Hilton
<PAGE>
================================================================================
----------------------------------------------------------------------
The Hilton/ITT Combination
----------------------------------------------------------------------
================================================================================
[LOGO] Hilton
<PAGE>
TRANSACTION BENEFITS TO ITT SHAREHOLDERS
================================================================================
o Significant Premium to Pre-Announcement ITT Share Price
- $70 per share purchase price represents a 64% premium to ITT's closing
price on January 27, 1997, the announcement date of Hilton's offer
o 50/50 Cash/Stock Consideration Provides Immediate Returns and
Significant Upside Potential
o ITT Shareholders to Participate in the Strategic and Financial Benefits of
the Combination
- The world's premier lodging and gaming company
- Estimated cost savings and synergies in excess of $100 million
- Portfolio of premier properties
o Combined Company to be Run by Management Team With Track Record
of Creating Shareholder Value
- Hilton management has substantial investment in Hilton stock (28%)
- ITT management currently owns less than 1% of ITT common stock
[LOGO] Hilton
<PAGE>
ITT FITS PERFECTLY INTO HILTON'S STRATEGIC PLAN
================================================================================
<TABLE>
<CAPTION>
USE HILTON'S STRONG
BALANCE SHEET WHILE CONTINUE
MAINTAINING INVESTING IN BUY/OWN HIGH-END
INVESTMENT GRADE CONSOLIDATING FULL-SERVICE MAXIMIZE USE OF
CREDIT RATING GAMING INDUSTRY HOTELS HILTON BRANDS
- --------------------- ---------------------- ------------------------- ------------------------
<S> <C> <C> <C>
o Cash/stock o Strengthens Hilton's o ITT owns 72 o Expand network of
structure competitive position properties, 22 of domestic and
maintains in Las Vegas and which are domestic international hotels
investment grade Atlantic City with full-service hotels
rating addition of premier o Potential to
brand names o Nearly 75% of monetize Sheraton
ITT's Lodging brand
o Over 80% of ITT's EBITDA is from
Gaming EBITDA is Owned Hotels
from Las Vegas and Segment
Atlantic City
</TABLE>
[LOGO] Hilton
<PAGE>
THE WORLD'S PREMIER LODGING/GAMING COMPANY
================================================================================
LTM EBITDA (As of 6/30/97)
($ in millions)
Pro Forma Hilton/ITT(1) $2,100.0
Hilton $1,106.0
ITT $ 994.0
Accor $ 915.9
Marriott Int'l $ 829.0
Host Marriott $ 499.0
Harrah's $ 423.4
Mirage $ 416.1
Circus Circus $ 376.1
MGM Grand $ 269.7
[GRAPHIC REPRESENTATION OF RESPECTIVE VALUES]
- -------------
(1) Before application of estimated cost savings and synergies in excess of $100
million.
[LOGO] Hilton
<PAGE>
SIGNIFICANT BENEFITS FROM COMBINATION
================================================================================
($ in millions)
<TABLE>
<CAPTION>
COSTS TO OPERATE
-----------------
Operational Savings By ITT By Hilton Savings Synergies Total
- ------------------- ------ --------- ------- --------- -----
<S> <C> <C> <C> <C> <C>
Corporate / General $60 $20 $40 $28 $68
Lodging Operations 55 40 15 + 13 = 28
Gaming Operations 15 5 10 9 19
--- - -- - --
Total $130 $65 $65 $50 $115
</TABLE>
[LOGO] Hilton
<PAGE>
EXPECTED TIMING
================================================================================
o Shareholder Vote at November 12th Annual Meeting
o Sign Definitive Merger Agreement and Close Cash Offer for 50.1% of ITT
Shares within 5-10 Days of Shareholder Vote
o Close Back-End Merger Within 90 Days
- Clear proxy materials and obtain regulatory approvals
- Obtain ITT and Hilton shareholder approval
[LOGO] Hilton
<PAGE>
THE ALTERNATIVES
================================================================================
<TABLE>
<CAPTION>
------------------------------------ -------------------------------------
A HILTON / ITT COMBINATION THE ITT "COMPREHENSIVE" PLAN
------------------------------------ -------------------------------------
<S> <C> <C>
------------------------------------ -------------------------------------
Value: o $70 per Share in Definitive Value o Uncertain Value; Market Value
- $35 in cash Expected to be in the $50s
- $35 in stock - $17.56 in cash
- Stock value protected by collar - Uncertain value of "stub" shares
- Uncertain they will do any deal
---
Securities Offered: o Stock in Largest Gaming/Lodging o Stock in Numerous Smaller Companies
Company - Levered gaming/lodging company
- Levered directories business (fire
sale to Clayton, Dubilier)
- Educational Services
Business Strategy: o Capitalize on the Upside of a Powerful o None: Takeover Defense... Expect
Hilton/ITT Combination Changes
Synergies o $100 million+ in Cost Savings/Synergies o None: Triple Overhead
Credit Characteristics: o Investment Grade o Junk
Potential Tax Liability o None o $2.8 billion: No Ruling
Management Strategy o Increase Shareholder Value o None: Entrenchment
------------------------------------ -------------------------------------
</TABLE>
[LOGO] Hilton
<PAGE>
- --------------------------------------------------------------------------------
We Need Your Vote Now!
- --------------------------------------------------------------------------------
o Market Understands Superiority of Hilton Bid
o Prevent Further Destruction of Shareholder Value
- Sale of premier assets at fire sale prices
o Reverse Prior Decisions Based on Management Entrenchment... Not Business
Judgement
- Sale to FelCor and related management contracts
- Undo Desert Inn "sale"
- Undo Clayton, Dubilier fire sale
o ITT May Propose a "Trust Me" Plan in Attempt to Salvage Proxy
[LOGO] Hilton
