Allegis Corp., the parent of United Air Lines, yesterday began hearing from prospective bidders for its other subsidiaries: the Hertz Corp. and the Westin and Hilton International hotel chains.
John L. Cowan, vice chairman and chief financial officer, was handling the calls, an Allegis spokesman said. But the actual bidding process appears to be weeks off, pending the development of a divestment strategy by Allegis and its financial advisers, First Boston Corp. and Morgan Stanley & Co.
New York investor Donald Trump and the Pritzker family of Chicago often have been mentioned as potential buyers for the hotel chains. In addition, Marriott Corp. of Bethesda has made inquiries about the Westin chain, according to a source.
The Allegis board decided Tuesday night to shed its nonairline subsidiaries, as well as the dream of former Allegis chairman Richard J. Ferris of building an integrated travel services company. With his strategy repudiated by the board under pressure from employes and investors, Ferris resigned.
What the board laid out Tuesday night, however, was no more than a broad strategy. Allegis spokesman Matt Gonring said that the company is assessing how to market the subsidiaries and has had a number of inquiries.
Marriott Corp. officials yesterday declined to comment on whether the company is involved in negotiations for the Westin or Hilton International chains.
But industry officials said that either would fit with Marriott's interests. Hotel companies often find it difficult to expand outside the United States, particularly in European cities where there is little land for new construction, so they typically expand by buying existing hotels. Marriott, which has 13 hotels outside the United States, has long been interested in expanding its international presence.
The Westin chain, with properties in Hawaii, Japan and Canada -- three areas Marriott is reportedly interested in -- could be particularly attractive to Marriott, industry sources said. However, Marriott is known to have been a bidder when Hilton International was on the block last year. KLM, and several other corporations, also bid against UAL Inc. (as Allegis was then known) for the chain.
The Allegis board and its advisers hope to devise a plan that gets the maximum return for shareholders. They are expected to consider such questions as whether it is more profitable to sell the hotels as chains or as real estate. Once that part of the process is complete, potential bidders for the hotels Hilton Hotels Corp. -- will have to assess the terms and arrange financing.
"Anyone who's interested, when they decide to make a bid, they can't just simply write a check," said Robert J. Joedicke, an airline industry analyst for Shearson Lehman Bros. Inc. "I think you'll find that the process is a little more complicated than you might imagine."
In addition to devising a plan for divestment, the board and its advisers must also structure proposals for employe participation. Allegis representatives met with representatives of the International Association of Machinists and Aerospace Workers yesterday. Staff writer Sharon Warren Walsh also contributed to this story.