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In a bid to become the world’s largest hotel and gaming company, Hilton Hotels Corp. last week launched a hostile bid to buy rival ITT Corp. for $10.5 billion.

The takeover attempt is the latest example of Beverly Hills-based Hilton’s long-term plan to boost its portfolio of large hotel properties, analysts said.

If both entities were combined, Hilton would own 655 hotels worldwide. That portfolio would include ITT’s Sheraton chain, the landmark Palace Hotel in San Francisco and the Waldorf Astoria in New York.

Some hotel industry analysts said the acquisition would also allow Hilton to gain a stranglehold on Las Vegas and Atlantic City.

In Las Vegas alone, Hilton owns the Las Vegas Hilton and Flamingo Hilton, and ITT owns the Sheraton Desert Inn, Caesars Palace casinos, and has plans to build a new multimillion-dollar casino in partnership with Planet Hollywood.

“In Las Vegas, you’d have one company that stands out as a dominant force in the gaming industry,” said Harold Vogel, an analyst with San Francisco-based Cowen & Co. “But at this point, things are still very much speculative.”

As of late last week, Hilton was expected to possibly sweeten its original $10.5 billion bid, and other bidders could surface. In short, the hostile bid for ITT is not expected to be easy, Vogel pointed out. ITT executives have already said they plan to circle the wagons in an attempt to maintain control of the hotel giant.

But the massive size of Hilton, and the aggressiveness of its President and CEO Stephen F. Bollenbach, might make a difficult opponent.

Hilton reported earnings in 1995 of about $172 million, while ITT earned about $147 million. Neither of the companies had released their 1996 results as of late last week.

“The sheer size of Hilton might be too much for ITT to fight off; Hilton has been expanding, and is poised for this,” said Stanley F. Tiverton, an analyst with New York-based Voight, Parsons & Co. “It always takes battles to form an empire, and this won’t be any different.”

ITT has reportedly formed a response team that includes bankers, attorneys and public relations specialists to fight off an unsolicited raid on the company. If successful, this would be Hilton’s second major acquisition in as many years . It purchased Bally Entertainment Co. in 1996 for about $2 billion.

Joe Bel Bruno

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