Hilton Hotels Corp. on Monday sweetened its bid for ITT Corp. to $12.8 billion, with an emphasis on cash, spurring speculation that Starwood Lodging Trust will increase its stock-heavy bid of $13.3 billion.
Hilton will pay $80 a share in cash for 55 percent of ITT’s shares and stock for the rest of the company.
Starwood is offering $82 a share, including $67 in stock and $15 in cash.
The surprise bid, Hilton’s third in chief executive Stephen Bollenbach’s 10-month pursuit of New York-based ITT, includes a security guaranteeing its stock will rise to $40 in a year or paying ITT shareholders cash or stock to make up the difference.
The increased offer sets up a bidding war with Phoenix-based Starwood, whose stock has almost doubled during the past year on Chairman Barry Sternlicht’s hotel spending spree.
Some ITT shareholders said Beverly Hills-based Hilton has the advantage for now, because of the amount of cash.
Still, investors and analysts said Starwood could easily come back with a higher offer. “Starwood has flexibility. They can up the cash, up the shares, or both,” said John Rohs, an analyst at Schroder & Co.
