(Bloomberg) -- Rand Araskog, the chief executive officer who strategically disassembled the maze of companies accumulated by International Telephone & Telegraph Corp. as it became the quintessential ravenous conglomerate of the 1960s and 1970s, has died. He was 89.
He died Monday at his home in Palm Beach, Florida, according to the Wall Street Journal. No cause was given.
ITT, under Harold Geneen, bought more than 350 businesses from 1960 to 1977, striking deals at a pace that reached one per week and transforming what had long been an international telephone company. Araskog was part of team Geneen, joining the company in 1966 as a vice president in ITT’s defense communications division and rising to an executive vice president by the time Geneen stepped down as CEO in 1977.
When Geneen’s first hand-picked successor, Lyman C. Hamilton Jr. was pushed out in July 1979, after just 18 months, Araskog took over as chief executive. He added the chairman’s title six months later. ITT was then the 11th-largest U.S. industrial company, with $22 billion in revenue, 368,000 employees operating in 80 countries and interests spanning Sheraton Hotels, Hartford Fire Insurance Co. and Continental Baking, maker of Wonder Bread.
“This is probably the most complex organization in American business,” Araskog said, according to an April 1980 New York Times profile of the “new master of the ‘Geneen machine.’”
‘Debt Laden’
At the same time, ITT was “a debt-laden corporation, one that was struggling to pay the bills for its many mergers and acquisitions,” Araskog recalled in his memoir, “The ITT Wars.” The company spent more than $600 million just to service its debt in 1980, he wrote. Proceeds from early sales of ITT business units went to pay interest and dividends on more than 150 million outstanding ITT shares.
The company’s decision in 1984 to slash its dividend to $1 annually from $2.76 made it a target for some of the biggest names in the takeover business, including Marmon Group Chairman Jay Pritzker, setting the stage for the “wars” Araskog wrote about in his book.
Over the next 15 years, Araskog’s attempts to tame ITT were watched closely by Wall Street. By the end of 1984, his fifth year in charge, he had sold 69 companies for about $2 billion. Baked goods, cosmetics and consumer appliances were among the fields the company exited entirely by 1989. By that time, ITT’s debt, which had exceeded $5 billion, was less than $3 billion.
Big Split
“Rand Araskog demonstrated a victory of mind over emotion,” Michel David-Weill, then senior partner at Lazard Freres & Co. and an ITT director, remarked in 1989. “It took courage.”
In 1995, Araskog split ITT into three publicly traded companies and spun off the two focused on industrial products and insurance services.
He remained head of what was left, the hospitality and entertainment units, which included the parent of Caesars Palace hotel casino in Las Vegas, a 70% stake in Italian hotel chain Ciga and a 50% stake in MSG Corp., owner of Madison Square Garden, the New York Rangers National Hockey League team and the National Basketball Association’s New York Knicks.
Finally, in 1997, Araskog and ITT accepted a buyout by Starwood Lodging Trust to thwart a hostile takeover bid by Hilton Hotels Corp. Araskog walked away with about $20 million in severance plus, for his help in the transition, an option grant of 162,500 shares of Starwood.
Scandinavian Roots
Rand Vincent Araskog was born on Oct. 31, 1931, in Fergus Falls, Minnesota, a farming community 60 miles (96 kilometers) southeast of Fargo, North Dakota. The area was a haven for Scandinavians and had attracted Araskog’s grandparents from Sweden in the late 19th century. His paternal grandfather, Nels Ohlsson, had changed his last name to Araskog, for the area of Sweden from which he came, according to Robert Sobel’s 1982 book, “ITT: The Management of Opportunity.”
Araskog’s father, Randolph, ran a small farm and dairy before becoming the town’s tax collector. Araskog’s mother was the former Wilfred Swanson.
With the support of his congressman, Araskog won a slot at the U.S. Military Academy at West Point, where he concentrated on Soviet studies and became fluent in Russian, according to Sobel. Following graduation in 1953, Araskog studied for a year at Harvard University, then went to work at the Pentagon. He spent a year in Europe and returned to Washington with special responsibilities for Hungarian affairs.
ARPA, Honeywell
In 1957 he was assigned to the Advanced Research Project Agency, the technology development arm of the U.S. Defense Department now known as DARPA, working as a speechwriter and spokesman.
He left government in 1960 for Honeywell Inc. in Minneapolis, where he rose to director of marketing and planning for the aeronautical division.
After joining ITT in 1966, he was named a corporate vice president of the defense and space group in 1971.
In his memoir, Araskog said he rose above his many peers by undertaking a perilous wartime trip to South Vietnam in 1972 to check on the company’s 1,500-worker Federal Electric Corp., which was maintaining electronic communications for U.S. forces. He was promoted to executive vice president in 1976, and he and Hamilton, as potential successors to Geneen, were assigned to his presidential office. Geneen died in 1997.
With his wife, the former Jessie Gustafson, Araskog had three children.
©2021 Bloomberg L.P.
RECOMMENDED FOR YOU
POPULAR