Hilton Hotels Management Claims Win : Says Anti-Takeover Measures Approved by Its Shareholders

Hilton Hotels management said Monday that it apparently has succeeded by a comfortable margin in getting shareholder approval of several anti-takeover measures at its annual meeting. The official tally was delayed, however, until Thursday.

Passage of the measures will make it virtually impossible for Las Vegas-based Golden Nugget, which Hilton had considered an unfriendly potential acquirer, to pursue moves that could result in its taking control of Hilton without management consent.

Management’s anti-takeover measures require a 75% vote of Hilton’s stockholders to approve a merger with anyone owning more than 10% of its stock or to remove directors.

Court Victory Last Week

Others include staggered terms for directors and a “fair price amendment” that management said would assure that all stockholders are treated similarly in the event of certain kinds of business combinations.

Hilton management’s success was foreshadowed last week when a Los Angeles County probate judge refused a petition by the California attorney general’s office to bar the voting of a 27.4% block of Hilton stock in favor of the proposals. The shares are held by the estate of company founder Conrad N. Hilton.

After the estate executor had turned down Golden Nugget’s offer of $72 a share, or $488 million, for the block last month, the Las Vegas-based casino operator continued to fight the anti-takeover measures in court and--in recent days--carried a proxy fight directly to the stockholders.

More than 50% of Hilton’s stock is in the hands of financial institutions, according to the company’s proxy material for the meeting.

Although the Versailles Ballroom of the Beverly Hilton was filled with stockholders Monday, not a single question was raised from the floor during the 40-minute meeting.

During his address to the stockholders, Chairman Barron Hilton reviewed the company’s problems with Golden Nugget and the Feb. 28 rejection by New Jersey regulators of Hilton’s casino license application for its almost completed, $308-million hotel-gambling complex in Atlantic City, N.J.

He also spoke of what the called “the good news” about the company.

Noting that the meeting was not the ordinary sort of previous years, Hilton said he was confident that the amendments “that we drafted to protect your investment” would get a majority of the votes.

Stock Undervalued

“Remember,” he said, “it was not takeover per se that the directors feared, but a front-ended, two-tier transaction.

“In such a situation, a corporate raider could attempt to acquire control of Hilton for cash and then squeeze out the remaining shareholders on less desirable terms. You are now protected against such tactics.”

What made the company “so attractive to the corporate raider,” Hilton said, was “the simple fact” that there is a considerable difference between the market price of Hilton (in the upper-$60-per-share range recently) and the current value of assets, which the annual report estimates at $94 a share.

“In any case, the raiders could not lose. If, for whatever reason, they could not peel off our assets like the leaves of an artichoke, to use (New York financier) Felix Rohatyn’s phrase, they would have gained control of one of the best-managed hotel companies in the world--not a bad soup for people who work such takeover deals through junk bonds and little risk.”

Stating that Hilton Hotels has steadily grown in income, dividends and stock-price appreciation in the last 10 years, the chairman said it would be normal for stockholders to ask why it suffered the “Atlantic City rebuff” and how much it has hurt the company.

“We came out of the situation richer in experience and, fortunately, no poorer in money,” Hilton said.

After giving the history of the New Jersey events, the chief executive said the company sold the property there to developer Donald Trump because the timing and uncertainty of going through the licensing rehearing “were such that the risks leaned too much in the opposite direction.”

There was no certainty, he said, that the New Jersey Casino Control Commission would approve the company on the second effort, despite the favorable recommendation from that state’s attorney general.

Vindicate Its Name

A second rebuff, Hilton said, would have “forced us to put up the property for sale . . . for fire sale prices.”

He said the company could have undergone the rehearing for the sole purpose of vindicating its name, adding:

“We resisted that kind of image-building in favor of the more prudent business decision to husband the resources of this company, protect our stockholders’ investment and show concern for our employees’ jobs.”

He said the company already is pursuing other opportunities to increase its casino operations and announced that a $60-million, 800-room addition to the Flamingo Hilton in Las Vegas will begin this summer. He also said that construction on the company’s Conrad International Hotel and Jupiters Casino in Queensland, Australia, is on schedule, and that the hotel-casino should be open in December.