The ITT Corporation, long one of America's most sprawling conglomerates, with interests ranging from insurance to casinos, confirmed yesterday that it intends spinning off its businesses to create three distinct publicly- owned companies.
The devolution of ITT will be one of the biggest in corporate history, involving annual sales of about $25bn. The company hopes to complete the process by the end of the year.
It has been known for some weeks that ITT's chairman, Rand Araskog, has been eyeing a three-company strategy. Mr Araskog will emerge as head of the most exciting-looking of the three new units. It will retain the ITT Corp name and include the hospitality and entertainment activities, including Sheraton Hotels and Caesar's World.
The other two groups to emerge will be the ITT Hartford insurance group and ITT Industries - the automotive, electronics, defence and fluid technology businesses.
Announcing the move, Mr Araskog promised it would be carried out "swiftly and smoothly". He added: "The end result for the long-term future is going to be very positive for each of these companies." Under the plan, holders of ITT common stock will get one share in each of the three new companies.
The reorganisation will allow Mr Araskog to develop his own priorities in the hotel and entertainment sector.
He recently vowed to make ITT "one of the premier hospitality, gaming and entertainment companies in the world". Recurrent rumours that ITT is interested in buying the ailing CBS television network have, however, been denied.
Adding to its worldwide Sheraton chain, ITT bought the Caesar's World gambling business for $1.7bn last December. Caesar's World operates casinos in Las Vegas, Nevada, and Atlantic City, New Jersey.
Also last year, Mr Araskog oversaw the purchase, in partnership with Cablevision Systems, of the Madison Square Garden sports and concert complex in Manhattan.
For ITT Hartford, meanwhile, the shake-up means the recovery of its independence, which was lost a quarter of a century ago.
Wall Street expects the transaction to be a boon for shareholders. In early trading yesterday, ITT shares rose to $113.625 from Monday's close of $109.24. It is thought likely that the shares of the three new companies together will be worth closer to $140.Reuse content