Levitt's Buy-Back

For the past 2% years, International Telephone & Telegraph Corp. has been trying without success to find a buyer for its Levitt home-building business, which the giant conglomerate is under a Justice Department order to sell. Last week a buyer finally surfaced. He was none other than William J. Levitt, the 67-year-old creator of the celebrated Levittown instant suburbs, who sold the business to ITT in 1968. Levitt signed a letter of intent to take the company back and said that he will operate it as a privately owned concern under its original name of Levitt & Sons (ITT had called it ITT Levitt). The deal, if approved by the Justice Department, will make the Company one of the few ever to enter the maw of a giant conglomerate and come out again years later in recognizable shape under its original owner.

All indications are that William Levitt is getting a bargain and ITT is taking a bath. ITT bought the business for common stock then worth about $90 Billion: most of it went to Levitt as majority owner. The terms of his repurchase will not be disclosed until federal trustbusters approve them, but trade estimates are that he will pay ITT no more than $30 million, and possibly as little as $10 million, to get the company back, And he will be getting back a much bigger company than he sold. Levitt & Sons was a leader in its field when ITT bought it--it recorded sales of $94 million in its last year of independent operation --but ITT invested heavily to enlarge it, increasing sales to an estimated $250 million annually.

Why is ITT letting go so cheaply? One reason, no doubt, is that Government-ordered divestiture sales rarely bring much money: buyers, knowing that the company has to sell, hold out for a low price. ITT agreed to sell Levitt, Avis, Inc. and other businesses as part of the violently controversial 1971 consent decree that permitted it to keep Hartford Fire Insurance. Another reason, though, is that the Levitt business, which had earned a profit of almost $4 million in the year before ITT bought it, lost $14 million under ITT's management last year. Home building is a business that demands quick, intuitive judgments, and it defeated ITT's management style, which is based on incessant reports to Chairman Harold Geneen that are supposed to put everything in numbers. Says Levitt, who headed the company for ITT for a while but then left: "We are not the type of company that can be run with their methods."

In order to take the company back, Levitt is coming out of a comfortable three-year retirement, much of which he spent aboard his yacht, La Belle Simone, one of the world's largest. Now he intends to resume active management. "It has got to be restructured," he says.

"From a decentralized company, it has got to be centralized right here"--meaning in his old office in Lake Success on Long Island, which he has kept all along.

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