Hilton’s 1997 hostile bid for ITT remains a classic example of the dynamics of a modern takeover fight, particularly in combination with the related case, IBM's Hostile Bid for Lotus. With premier investment banks and law firms on both sides, the two companies and their management teams faced off in a high-stakes struggle for control of the rapidly growing but high-risk hotel and gaming businesses. Hilton’s bid followed stumbles by ITT, which put it on the defensive. Still, ITT had a poison pill and, because it was incorporated in Nevada, had ample time to develop a dramatic seven-point restructuring plan involving spin-offs, new debt, self-tenders, and a white squire. But the plan involved legal and financial risks.
Provides a multilayered narrative of a classic modern hostile takeover battle, illustrating the ways in which takeover defenses – including both “structural” and “transactional” defenses – interact with financial and strategic forces to constrain the choices facing both bidders and targets. The cases show the various ways in which litigation intrudes upon the M&A landscape in such a setting, and can be outcome-determinative in some instances. At the same time, the cases also show the limits of lawyering in the takeover context, with unexpected business developments (some of them strongly affected by interactions with other laws, such as tax law) can disrupt what might appear to be a predictable set-piece battle. Gives students opportunities to consider the effects of corporate and securities law from multiple perspectives, including the target’s legal team, the target’s board, the bidder’s management and litigators, the target’s shareholders, and a neutral court asked to resolve on a rapid basis crucial open legal issues with large consequences for the parties involved.
Mergers & Acquisitions, Hostile Takeovers, Corporate Restructuring, Corporate and Securities Law
Geographic: United States
Industry: Gaming, Hotels
Event Year Begin: 1997