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SHOULDA-COULDA-WOULDA AT ITT

LONGTIME SHAREHOLDERS of ITT may be rejoicing over Starwood Lodging's pending deal to acquire the company at $85 a share, but they could have done a lot better, a lot earlier. In 1985, ITT was under pressure from corporate raider Irwin Jacobs, who aimed to buy the company and bust it up. Instead, ITT boss Rand Araskog stymied Jacobs and kept the company, eventually selling some units, such as Alcatel, and spinning off others, such as Rayonier.

But calculations show that shareholders would have fared better if they had taken a deal 12 years ago.

No official offer was ever made, but Jacobs forces had informally floated a figure for ITT of about $20 more than its share price, which was $33.50 before Jacobs gave up. If ITT shareholders had taken $53.50 in cash and invested it in the Standard & Poor's 500-stock index, today they would have $373.83 on a total return basis with dividends reinvested, according to computations for BUSINESS WEEK by a fellow McGraw-Hill Cos. unit, Standard & Poor's Compustat.

But sticking with ITT through its convoluted history of spin-offs, special dividends, and anticipated sale to Starwood has yielded shareholders only $283.41.

An ITT spokesman says it's all academic because Jacobs never put an offer on the table. Still, no matter how teary Araskog got announcing ITT's sale, just remember, he's not the only one who has a right to feel bad. Shareholders should shed a tear, too.

EDITED BY LARRY LIGHT & ROBERT McNATT


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Updated Nov. 20, 1997 by bwwebmaster
Copyright 1997, Bloomberg L.P.
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