Harvard Settles Marriott Suit

Harvard has abandoned its bid to block the division of the Marriott Corporation into two companies, a split which the University's in-house investment team had previously argued against because it would damage the performance of Harvard's endowment.

In a statement, Marriott said Harvard and three other holders of its preferred stock had agreed to dismiss their case in Delaware court against the hospitality giant in exchange for "an immaterial payment" from Marriott.

Under a plan approved by Marriott shareholders on Friday, the corporation will divide into Marriott International, a hotel operation; and Host Marriott, a real estate, airport and toll road concessions business that will carry most of the company's $2.9 billion debt.

Earlier this month, Harvard asked William T. Allen, the chancellor of Delaware's equity court, for a restraining order preventing the split, arguing that the University's endowment performance would be hurt. The University also charged that Marriott's method of using a special dividend to accomplish the split was illegal.

Allen rejected that request in harsh language, suggesting that Harvard stood little chance of winning a suit in his court to try to collect damages.

"Marriott is pleased with the settlement," Stephen F. Bollenbach, executive vice president and chief financial officer for the company, said in the Marriott statement. "It allows us to bring the litigation to a close and to focus our attention on the timely completion of the special dividend."

According to the terms of the split, Harvard will no longer receive a dividend on its preferred stock, and those shares will be convertible only into shares of the highly leveraged Host Marriott.

The University owns 480,300--or 12 percent--of Marriott's four million preferred shares, an investment which, as of yesterday, was worth approximately $38.7 million.

Nick Hill, a spokesperson for Marriott, said the com- pany would not comment further on the matter.

Jack R. Meyer, president of Harvard Management Company, refused to comment on the issue yesterday.

Harvard Management Company, which is responsible for investing the University's money, has been the target of criticism in recent years from some alumni for its disappointing performance, excessive risk taking and high employee salaries.

In fiscal 1992, Harvard's endowment was outperformed by those of 71 percent of the nation's colleges and universities

Jack R. Meyer, president of Harvard Management Company, refused to comment on the issue yesterday.

Harvard Management Company, which is responsible for investing the University's money, has been the target of criticism in recent years from some alumni for its disappointing performance, excessive risk taking and high employee salaries.

In fiscal 1992, Harvard's endowment was outperformed by those of 71 percent of the nation's colleges and universities