HARRAH'S MAY BE IN ITT'S GAME PLAN Don't bet on ITT's succumbing to Hilton Hotels' hostile $55-a-share bid--even if Hilton sweetens the pot--possibly to 60 a share. That's the word from several ITT insiders, who insist that Chairman Rand Araskog can't envision selling out to Hilton CEO Steve Bollenbach. ''ITT will undertake a swift preemptive strike that's lucrative for shareholders,'' says one insider. ITT brass are looking at various options. But according to people who know what's being studied, here is the likely strategy: ITT will sell assets worth $5 billion in noncasino-hotel businesses, declare a big special dividend, and, at the same time, announce a friendly deal to acquire another gaming company that will bolster ITT's operations in Las Vegas and Atlantic City. How will these moves block Hilton? A sale of assets preempts Hilton--if it succeeds in buying ITT--from cashing in on them. And acquiring another casino for cash and stock would make ITT less attractive, because of increased debt. The outfit that ITT is likely to strike a deal with, say these sources, is Harrah's Entertainment (HET). One investment banker says the buyout price for Harrah's, trading at 18 7/8, is 35 a share, or $3.5 billion. ITT, he believes, will offer to assume Harrah's debt, estimated at about $800 million. Based in Memphis, Harrah's is a top U.S. casino operator, with 19 facilities in eight states. For 1997, analysts see sales of $1.7 billion and earnings of $1.32 a share. With 102 million shares outstanding, Harrah's has a market capitalization of $1.9 billion. ''The company's goal is to have 30 casinos in operation by the end of the decade and to diversify internationally,'' says Smith Barney analyst Harry Curtis, who likes the stock based purely on fundamentals. Harrah's expects to complete a new hotel in Atlantic City by July, 1997. It's also planning to expand facilities there, making Harrah's one of the largest casinos in Atlantic City. Some ITT noncasino businesses targeted for sale, says one insider, include its 50% stake in Madison Square Garden, its New York Knicks and Rangers teams, ITT Information Services, ITT World Directories, and ITT Educational Services units. ITT spokesman Jim Gallagher says that all options are being considered and that the company will make an announcement in mid-February. Harrah's CEO Philip Satre says shareholders' interests will guide any decision. BY GENE G. MARCIAL RELATED ITEMS CHART: Down on Its Luck Just Now Return to top of story

Updated June 15, 1997 by bwwebmaster
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