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LAWSUIT PENDING AGAINST ITT TAKEOVER OF CAESARS WORLD
Published December 22, 1994
A group of Caesars World shareholders filed suit in Palm Beach Circuit Court charging that Caesars World did not "shop itself around to get the highest price" when it agreed to a $1.7B deal with ITT. The shareholders assert that Caesars Chair & CEO Henry Gluck agreed to take ITT's offer because it benefited management "rather than stockholders." Gluck will retain his position after the sale and Caesars President & COO J. Terrance Lanni also would remain part of the management team. Analysts have called ITT's $1.7B offer a "fair but not exorbitant price." ITT offered $67.50 for every share in Caesars World. When the deal was announced, Caesars was trading at about $45 per share. It closed yesterday at $66. The lawsuit alleges that Gluck did not pursue other suitors, such as Mirage Resorts and Alliance Gaming Corp. It also alleges that Gluck was prepared to use defensive measures to "ward off competing offers." The plaintiffs' chances may have been approved by a court ruling in a similar case last December. Paramount Communications was forced to consider a hostile offer from QVC after shareholders sued to block a friendly merger between it and Viacom. "The court sent a loud warning to corporate managers that they cannot let personal preferences govern their decisions." Meanwhile, the SEC is examining trading in Caesars' stock, which rose "noticeably higher in advance of Monday's takeover offer" (Cindy Krischer Goodman, MIAMI HERALD, 12/22). THE GAMBLING PROBLEM: Because ITT is expected to become co- owner of the Knicks and Rangers, the NHL and NBA will probably require ITT to ban betting on their games once ITT officially gains control of both Caesars and the two teams. ITT spokesperson Jim Gallagher: "The leagues have their rules and we have publicly said we will do whatever we have to do to own both" teams (Kenneth Gilpin, N.Y. TIMES, 12/22). In New York, Dave Anderson notes that one solution would have ITT selling off the two teams: "Casino owners catering to high rollers shouldn't also be team owners. ... Too much suspicion. Too much temptation. Sports has enough worries about gambling" (N.Y. TIMES, 12/22).