ITT reconsiders Ladbroke bid

ITT, the Sheraton hotels and Caesar's World casinos group, could bid for Ladbroke in an effort to ward off a hostile bid from Hilton Hotels.

ITT had talks with Ladbroke about a merger last February, but the discussions were abortive.

However, those talks, disclosed in a filing by Hilton to the US Securities and Exchange Commission, could pave the way for ITT to launch a poison- pill bid for Ladbroke without incurring the wrath of shareholders in the US courts.

Analysts point out that the takeover talks last year could be used by ITT as proof that a Ladbroke acquisition was part of its long-term strategic plans rather than an attempt to fend off Hilton's $10.6bn (pounds 6.6bn) bid.

ITT has already been sued in the New York courts by three investors alleging that the board has attempted to discourage Hilton because directors want to save their own jobs. ITT has a number of options available to fend off the bid, and US analysts are convinced it will not give in without a fight in what promises to be a prolonged battle.

ITT has already secured some defence against a bid through its move to Nevada in 1995 to take advantage of the state's company law, which was rewritten in 1991 to offer companies greater protection from takeovers. US lawyers expect the law to be tested, given the size and profile of the bid.

It would be ironic if Ladbroke were drawn into the battle to save ITT since it owns the Hilton International brand. Only last month Ladbroke and Hilton signed a worldwide marketing alliance re-uniting the Hilton brand for the first time in 32 years.

When Hilton's bid for ITT was first announced, it took the shine off Ladbroke's shares since analysts felt the prospect of a full-scale bid from Hilton had become even more remote.