LAWSUIT PENDING AGAINST ITT TAKEOVER OF CAESARS WORLD
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).