Itt Investors Reject Hilton Hostile Bid Falls Short; Starwood Plan Favored

Hilton Hotels Corp.’s quest to win ITT Corp. ended decisively Wednesday after ITT shareholders rejected its $10 billion hostile bid in favor of a merger with upstart hotel owner Starwood Lodging.

Starwood, which owns or manages hotels bearing the Westin, Marriott and Doubletree names, will pay $10.6 billion to add ITT’s Sheraton and Caesars chains and become the world’s largest hotel and casino company.

While ITT was victorious over Hilton, the vote marked the end for a company that was once the quintessential conglomerate, with products spanning from Wonder bread to Avis rental cars.

ITT had been shrinking for years, but Hilton’s pursuit forced it to abruptly sell off businesses such as its half of Madison Square Garden and eventually seek rescue from Starwood.

“It’s a bittersweet experience for me,” said ITT Chairman Rand Araskog, who will hand over his post after 18 years to Starwood Chairman Barry Sternlicht.

ITT’s preliminary estimates showed 65 million of the 90 million shares that were voted favored re-electing ITT’s current board rather than approving Hilton’s proposed directors, who would have accepted the hostile bid. Final tallies of the results will take one to two weeks.

ITT is still free to field other offers, but no other suitors are expected to emerge and Hilton has pledged to abandon its pursuit.