Product details

By continuing to use our site you consent to the use of cookies as described in our privacy policy unless you have disabled them.
You can change your cookie settings at any time but parts of our site will not function correctly without them.
Case
-
Reference no. UVA-F-1217
Published by: Darden Business Publishing
Originally published in: 1998
Version: 11.2001
Length: 31 pages
Data source: Published sources

Abstract

This case provides a vehicle for discussing analytical approaches to understanding bidding strategies in a hostile-tender-offer setting. In 1997, Hilton Hotels Corporation offered to acquire ITT Corporation in an unsolicited tender offer. ITT resisted in several ways. At the date of the case (July 17, 1997), ITT announces a restructuring of the firm aimed at delivering about $70 a share to its shareholders. The task for the student is to understand why Hilton''s takeover attempt has failed thus far, and what the possible responses might be at this stage. The case contains a completed valuation analysis of ITT (prepared by the casewriter), which suggests that ITT is worth, at most, $89 a share to Hilton. In preparing a possibly higher bid for the firm, the student must weigh the probability of another bidder''s entering the fray and that competitor''s bid price. The instructor can use this setting to compare the target shareholders'' outlook with the classic ''prisoner''s dilemma'' and to discuss the expected value of not tendering- both concepts are important in devising a bidding response.

About

Abstract

This case provides a vehicle for discussing analytical approaches to understanding bidding strategies in a hostile-tender-offer setting. In 1997, Hilton Hotels Corporation offered to acquire ITT Corporation in an unsolicited tender offer. ITT resisted in several ways. At the date of the case (July 17, 1997), ITT announces a restructuring of the firm aimed at delivering about $70 a share to its shareholders. The task for the student is to understand why Hilton''s takeover attempt has failed thus far, and what the possible responses might be at this stage. The case contains a completed valuation analysis of ITT (prepared by the casewriter), which suggests that ITT is worth, at most, $89 a share to Hilton. In preparing a possibly higher bid for the firm, the student must weigh the probability of another bidder''s entering the fray and that competitor''s bid price. The instructor can use this setting to compare the target shareholders'' outlook with the classic ''prisoner''s dilemma'' and to discuss the expected value of not tendering- both concepts are important in devising a bidding response.

Related