The New Super Connie

In the hurly-burly world of real estate, no one fancies himself a bigger operator than smooth-talking William Zeckendorf, president of Manhattan's Webb & Knapp. Says Zeckendorf: "I like to turn peanuts into bananas." Last week, reaching out for a new piece of fruit, Top-Banana Zeckendorf bumped into another big operator. In the collision, Zeckendorf's feet went skidding out from under. Zeckendorf's opponent: Conrad Hilton, who in about a dozen years has risen from an obscure Southwestern innkeeper to a position as the world's biggest hotelman (TIME, Dec. 12, 1949 et seq.). The prize was the Statler hotel chain (eight hotels, two more abuilding in Dallas and Hartford, Conn.), which Hilton snapped away from Zeckendorf in history's biggest hotel deal. Price: $78 million.

Open for Bids. The battle started three months ago, when word got out that the Statler family, headed by Mrs. Ellsworth Statler, widow of the founder, would listen to bids for the country's third-biggest hotel chain. Zeckendorf promptly offered $50 a share for the 1,551,226 shares of Statler stock outstanding, then selling at $43.50 a share. The Statler board of directors snapped up Zeckendorf's offer, and sent a letter to stockholders advising them to accept. But it turned out that Zeckendorf was talking to the wrong people.

While Zeckendorf was dealing with the Statler directors, Connie Hilton had been quietly making friends with the Statler family itself. When Hilton heard of Zeckendorf's offer, he hopped on a plane, flew from California to New York to talk to "the people who really counted"--Mrs. Statler and other big family stockholders. Hilton's secret weapon: his argument that he could run the Statler chain better than anyone else. Living in Hilton's Waldorf Towers in Manhattan, Mrs. Statler had watched and admired the way Hilton did business, and was inclined to agree.

Last week Hilton sprang his big surprise. By matching Zeckendorf's price, he had won over the Statler family and bought their 753,000 shares (49% of the total) for $37.6 million. Stockholders owning the remaining 798,226 shares got the same offer of $50 a share.

In & Out. In Manhattan, somewhat dazed by Hilton's speed, Zeckendorf first seemed about to fight, then gracefully surrendered when it turned out that Hilton had already lined up another big block of Statler stock. Wired Bill Zeckendorf: "Sincere and warm congratulations." Into a stockholders' meeting originally scheduled to consider Zeckendorf's offer walked Hilton's lieutenants, with proxies for 1,061,731 shares. Out went most of the Statler's board of directors, including Chairman William L. Marcy, formerly (until his recent divorce) a member of the Statler clan. Three Hiltonians, headed by Connie Hilton as chairman, were voted into their seats, and the battle was over. Smiled Zeckendorf: "A motion for adjournment is in order, wouldn't you say?"

Hilton was not saying where he would get the cash to finance his latest coup. But the Manufacturers' Trust Co. promptly lent him $8,000,000 to make a down payment on the 753,000-share Statler-family block, and the word was that insurance firms might lend him another $66 million. The remainder will probably come from debentures and a small Hilton stock issue.

Five Are Better Than One. Why had Hilton bought the Statler hotels? For one thing, says Hilton, "they're our kind of hotel, big and comfortable." The money-making chain also gives Hilton his first foothold in such important cities as Boston, Cleveland, Detroit, Buffalo, Hartford, and Dallas. Furthermore, Hilton is a great believer in owning two or more hotels in one city (he now has five in Manhattan alone), feels he can cut costs drastically by combining facilities where Statler and Hilton hotels now compete.

Another big reason for the purchase was the tax advantage the Statler chain will bring Hilton. For tax purposes, it was almost the same as building a brand-new group of hotels; Hilton can start depreciating them at the full purchase price and not just the value at which they are carried on the Statler company's tax books. The tax advantage for Hilton amounts to about $2,200,000 a year, which, with the $2,200,000 Statler can already charge off, raises Hilton Hotels Corp.'s total annual depreciation figure to $8,200,000.

With the Statler chain in his pocket, Connie Hilton has pulled far into the lead as the world's biggest hotel operator (27 hotels around the globe, 30,000 rooms). Says he: "When you consider how big the hotel business really is, we've got a long way to go. We're just starting."

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