|Hilton - ITT Wars Case Study Solution (setting bidding strategy for takeovers)
There are 6 questions that need to be answered to
successfully solve this case.
1. Why might Bollenbach have opened his bidding for ITT at $55 per
share? What was his likely strategy?
2. Why did Bollenbach not raise the bid between January and July?
3. What is the stand-alone value of ITT's equity? How did this
compare to ITT's historical market value? What was ITT's "break-up"
value? What was ITT's value to Hilton?
4. What do you expect the price of ITT's equity would be if Hilton's bid
were to fail? Would it collapse to its pre-tender-offer trading value of
around $44? Would it remain stable as its existing level of around
$60?, or would is rise to meet ITT's share-repurchase price of $70?
5. What are the implications of an EVNT analysis in determination of
the next bid? At what bid would risk arbitrageurs be inclined to tender
their shares to Hilton? How much do they expect to earn from the new
6. How should Bollenbach react to ITT's trivestiture defense? Should
he change the bid or walk away?
In January of 1997, Hilton offered $55 a share in cash for 50.1% of ITT, and $55 a share in stock for the remaining 49.9%. Bollenbach
might want to have opened his bidding for ITT at $55 per share because it was lower than the intrinsic value. This is a very conservative
offer, and ITT will counter offer the $55. It is expected that the counter offer will be higher than the intrinsic value, so the negations
should favor Hilton at this time. Bollenbach’s likely strategy was to under bid ITT. This strategy can sometimes backfire, although it did
not happen in this case, Bollenbach left the door open for a competitor to come in and offer a bigger bid that Hilton might have offered if
they did not low-ball their initial offer.....
The solution for the case study is contained in 2 files, a word file and an excel file. The word file is 2,563 words (7 pages single
spaced), and solves the case by analyzing the issues and answering the 6 questions above. The Excel file contains the financial
exhibits for the solution. The cost of the solution is $49. You can pay via the PayPal link below. Once payment is made, the
solution is available for immediate download. If you have any questions before purchasing, you can reach us at