Hilton ups ante in battle for ITT
Hilton Hotels Corp. sweetened its bid for ITT Corp. to $12.8-billion in mostly cash, spurring speculation that Starwood Lodging Trust will increase its stock-heavy bid of $13.3-billion. Hilton will pay $80 a share in cash for 55 percent of ITT's shares and stock for the rest of the company. Starwood is offering $82 a share, including $67 a share in stock and $15 in cash. The surprise bid, Hilton's third in 10 months, includes a security guaranteeing its stock will rise to $40 in a year. It sets up a bidding war with Starwood, whose stock has almost doubled the past year on chairman Barry Sternlicht's hotel buying binge.
LOCKHEED MARTIN DEAL WINDFALL FOR GE: Lockheed Martin Corp. said Monday that it will turn over some businesses to General Electric Corp. in a $2.8-billion deal that will let Lockheed Martin retire 29-million shares of preferred stock that GE has owned since it sold its aerospace unit to Lockheed Martin in 1993. For GE, the transaction represents a windfall on its original investment. GE sold Lockheed Martin its aerospace business for $3-billion, which included convertible preferred stock then valued at $1-billion. As part of Monday's transaction, GE will take a note back from Lockheed in the amount of $1.5-billion, representing the difference between the $1.3-billion the businesses are worth and the value of the stock. All told, GE expects to record a gain of $1-billion on the deal.
US AIRWAYS LAUNCHES SPENDING SPREE: In the midst of strong profits and a new labor deal with its pilots, US Airways Group Inc. plans to spend almost $16-billion to expand its fleet, add routes and build a new international terminal in Philadelphia. The airline confirmed Monday its order for about 400 new Airbus Industrie aircraft and $1.4-billion worth of engines. It also outlined plans for new international and express terminals at Philadelphia International Airport at a cost of about $300-million. Coming into this year, US Airways had lost $2.7-billion since 1990 and its fleet had dwindled from 454 aircraft to 376. The new initiatives are designed to reverse that decline.
TREASURY YIELDS RISE: Interest rates on short-term Treasury securities rose in Monday's auction. The Treasury Department sold $11.1-billion in three-month bills at an average discount rate of 5.12 percent, up from 4.97 percent last week. Another $11-billion was sold in six-month bills at an average rate of 5.13 percent, up from 5.08 percent. The new discount rates understate the actual return to investors: 5.26 percent for three-month bills and 5.34 percent for a six-month bill. In a separate report, the Federal Reserve said the average yield for one-year Treasury bills fell to 5.35 percent last week from 5.53 percent the week before.
DOW DOLLAR YIELD
30 INDUSTRIALS VS. JAPANESE YEN 30-YEAR U.S. BOND
7674.39 121.32 6.21
+232.31 +0.95 +0.06