Allegis Will Sell Westin Hotels for $1.53 Billion : Deal With Bass Group, Japanese Firm Would Complete Restructuring

NEW YORK — Allegis Corp., the parent company of United Airlines, said Tuesday that it will sell its Westin Hotels subsidiary for $1.53 billion, essentially completing the major restructuring of the company announced in June.

The 62-hotel worldwide chain is being bought by the Robert M. Bass Group of Fort Worth and Aoki Corp. of Japan, supported by the Industrial Bank of Japan. Of the purchase price, Allegis said, $1.35 billion will be in cash and approximately $180 million of Westin debt will be assumed by the purchasers.

Aoki is a construction company that has hotels in Brazil, Panama and Taiwan. Its Sao Paulo-based subsidiary, Caesar Park Hotels International, purchased New York’s legendary Algonquin Hotel in June. Aoki has assets of about $2 billion.

Founded in 1930

At the office of the Bass group, headed by financier Robert Bass, a secretary said that “we have standing orders never to talk to the media, so that is the quote we give to the media.” At the offices of the Bass family, a spokesman said that the other members of the family were not involved in this transaction. The reclusive family is headed by Perry, the father, and sons Robert, Sid, Edward and Lee.

“Sometimes they invest together; other times they make deals apart,” said the spokesman, Warren Woodward. The family is among the wealthiest in the United States.

Westin Hotels & Resorts, founded in 1930 by six hotel operators who formed Western Hotels to manage 17 in the Pacific Northwest, was bought by UAL Inc., which Allegis was then called, in 1970. Based in Seattle, it owns some of its hotels and manages others, but the company will not give a breakdown.

Westin hotels in California include the Century Plaza and Bonaventure Hotels in Los Angeles, the Westin South Coast Plaza in Orange County and the Westin St. Francis in San Francisco.

When it announced its restructuring, Allegis said it planned to dispose of its Hertz car rental business, which it had owned since 1985, and the Hilton International hotel chain, which it had owned for just a few months. It also said it would change its name to United Airlines Inc.

The company became Allegis last February, when Chairman Richard J. Ferris embarked on a plan to change its image from merely an airline company to a travel-services conglomerate.

But the plan met with strong disapproval from shareholders, and Ferris and about 20 other senior officer resigned.

Frank A. Olson, who had headed Hertz before it was purchased by United, succeeded Ferris as chairman and chief executive. However, when the Hertz sale was announced recently, Olson said he would return to the car rental company. Allegis is now seeking a chief executive, and a choice could be announced as early as Thursday when a regularly scheduled board meeting is held.

Allegis has said that also plans to sell up to 49% of its Covina/Apollo computer reservations system. It said Tuesday that negotiations toward that end are under way.

The closing of the sale of Hilton International to Ladbroke Group of Great Britain for $1.07 billion took place on Oct. 14. The Hertz sale to an investment group headed by Olson, other Hertz management people and the Ford Motor Co. for $1.3 billion is expected to close by the end of the year.

Allegis said it was its intention to distribute the net proceeds of the sales, after taxes and expenses, to shareholders. These shareholders will then also retain their shares in Allegis, which will consist largely of United Airlines.

Analysts said the price Allegis will receive for Westin is more than adequate. “We had been looking for between $1.2 billion and $1.7 billion,” said Edward Starkman, airline analyst with the New York brokerage house of Paine Webber. “They were anxious to get it done. They want to make the payout and to get moving again.”

Starkman said shareholders can expect as much as a $67 payout, based on the company’s 57 million common shares outstanding. But he added that due to the stock market crash, like many other companies, Allegis had bought back some of its own shares.

Starkman said Allegis can expect to get a good price for its half of the computer system. He said it was much more sophisticated and had greater market penetration than Trans World Airlines’ Pars computer system. Half of that was sold recently to Northwest Airlines for $200 million.

Paul Karos, airline analyst with L. F. Rothschild, Unterberg, Towbin, a New York stock brokerage, said the total value of the company stock is between $80 and $90 a share. He said stockholders can expect about $60 a share in the payout and that the remaining airline stock would be worth as much as between $20 and $25 per share.

Allegis stock closed Tuesday at $71, up $9.50.

WESTIN’S WORLDWIDE PROPERTIES UNITED STATES

Peachtree Plaza, Atlanta

Copley Place, Boston

Westin Downtown Chicago

Westin Hare Airport

Westin Cincinnati

Dallas Galleria

Tabor Center, Denver

Renaissance Center, Detroit

Paso del Norte, El Paso

Cypress Creek, Fort Lauderdale

Mauna Kea, Hawaii

Westin Kauai

Westin Maui

Houston Galleria

The Oaks, Houston

Westin Indianapolis (late 1988)

Crown Center, Kansas City, Mo.

Century Plaza, Los Angeles

Bonaventure, Los Angeles

Canal Place, New Orleans

Plaza, New York

South Coast Plaza, Costa Mesa

Arizona Biltmore

William Penn, Pittsburgh

Benson, Portland, Ore.

Westin San Francisco Airport

St. Francis, San Francisco

Westin Seattle

Westin Stamford, Conn.

La Paloma, Tucson

Williams Center, Tulsa

Westin Vail, Colo.

Westin Washington, D.C.

CANADA

Westin Calgary

Westin Edmonton

Westin Ottawa

Harbour Castle, Toronto

Bayshore, Vancouver

Westin Winnipeg

EL SALVADOR

Camino Real, San Salvador

GUATEMALA

Camino Real, Guatemala City

HONG KONG

Shangri-La, Kowloon

JAPAN

Miyako, Kyoto

Takara-ga-Ike Prince, Kyoto

Akasaka Prince, Tokyo

Tokyo Prince

KOREA

Chosun Beach, Pusan

Westin Chosun, Seoul

MEXICO

Las Brisas, Acapulco

Camino Real, Cancun

Camino Real, Ixtapa

Las Hadas, Manzanillo

Camino Real, Mazatlan

Camino Real, Mexico City

Galeria Plaza, Mexico City

Ambassador, Monterrey

Camino Real, Puerto Vallarta

Camino Real, Saltillo

PHILIPPINES

Philippine Plaza, Manila

Westin Stamford, Manila

SINGAPORE

Westin Plaza, Raffles City

Westin Stamford, Raffles City

SOUTH AFRICA

The Carlton, Johannesburg

Source: Westin Hotels & Resorts