Biggest American Finance Battle Today

Press, Volume C, Issue 29501, 1 May 1961, Page 20

Biggest American Finance Battle Today

[By PETER MICHXLMOREI NEW YORK. In the aloof, ivory-tower world of American big business, the turmoil in Cuba and Laos is forgotten in the face of the impending battle of Alleghany. The biggest control battle in the history of American finance will be fought on May 1.

Alleghany is the name of a giant holding corporation with control of combined assets of more than 6000 mil* lion dollars.

After a long and bitter squabble with management that boiled down to the complaint that the company was not making money quickly enough, two lean and leathery Texans launched a proxy contest to wrest control of Alleghany. They are the brothers Murchison, Clint, jun, and John, both in their late 30’s, who are handsomely staked in business and in this fight by their famous multi-mil-lionaire father, Clint Murchison.

The main target of the Murchison brothers is a courtly easterner named Allan Kirby, aged 68, who is the present Alleghany chairman.

Mr Kirby Inherited 50 million dollars from his father—the founder of the Woolworth chain—and with astute, be-hind-the-scenes business dealings built it up into a personal fortune of about 300 million dollars. Proxy Votes Today, at the company’s annual meeting in a Baltimore Hotel, the eastern dude will face the fast-drawing Texans across a table scattered with proxy votes. Nobody is willing to wager on the likely winner, although Wall Street feels that the Murchisons have done a better job in capturing the stockholders’ imaginations. They had one of their men pose for a picture with the actor, John Wayne, and revealed that the cowboy star was a Murchison supporter. He gave the brothers proxy for his 100 Alleghany shares, which are worth a mere 1100 dollars on the market.

Actually, in spite of all the common stock buying by both sides the price of Alleghany shares has moved only from 10 dollars to 15, and now they have sagged back to near the bottom again. After a hair-raiaing buying spree in which he spent up to 5.000,000 dollars, Mr Kirby now holds some 3.200,000 shares or 33 per cent, of Alleghany's voting common. The Murchison brothers have 36 per cent. With a simple majority needed to name seven members of Alleghany’s nine-man board, the shares still held by the company’s 15,000 stockholders will settle the issue. More than 3000 of these people are expected to attend the company’s public meeting. They prill have the rare enjoyment of watching business titans vying for their every favour. Great Empire There is a great financial empire at stake today. Although the Alleghany holding company has only 10 employees. a small New York office and a mere 125 million dollars in securities itself, it wields colossal power through a financial pyramid that staggers belief. Alleghany controls the New York Central Railroad—the second largest in the country —the Missouri Pacific railroad, and it has a big stake in the real estate company of Webb and Knapp, run by the legendary William Zecken-do.-f.

But the main Alleghany asset Is control of Investors* Diversified Services, an investment complex managing companies with assets of 3000 million dollars. Involved in the empire is a large insurance company and five big mutual binds organisations. Allan Kirby became lord of this manor by his own efforts and he is not about to let it go easily. He staked the flamboyant business tycoon, Robert R. Young, to buy Alleghany 24 years ago when the company wag close to bankruptcy. A shy man who usually likes to keep out of messy business dealings himself, Mr Kirby and his money stood behind Mr Young w'hile Alleghany mushroomed. When Young committed suicide in 1958, Mr Kirby reluctantly took over the chairmanship. The Murchison brothers had become large stockholders of Alleghany during Young’s final years and they were so intrigued by the enormous financial leverage of the company that they

purchased the stock held by Young's widow. Already the brothers had a personal interest in the company because Young had put them on the board of the rich Investors’ Diversified Services, the big Alleghany canon.

The next chapter in the Alleghany drama is cloaked tn mystery, but it is speculated that Mr Kirby feared the ambition of the Texans and had them voted off the board by charging that they had "improperly steered" vast company deposits to banks that would return them personal favours. Whatever happened, the Texans lost their patience a few months ago and started a proxy fight. ‘‘Kirby has failed to develop a skilled and experienced management team,” said John Murchison. “Alleghany should not be a holding company just for the purpose of bolding. We should develop special situations, get into them, realise a profit if we can get out.” Kirby Conservative TTiis sounded ruthless to Mr Kirby, who had advocated a more conservative programme—invest In companies with strong growth potential, and stay put *Td say the Murchison's were crazy,” said Mr Kirby, in his quiet careful voice. Stockholders on Mr Kirby’s side scorned the Intruders from Texas, who had their own personal fortune of 150 million dollars, unlimited support from their fatherone of the richest men in the world—and still wanted to control more wealth. Laos crumbled and the Congo was in flames, but still the Murchisons and Mr Kirby battled on. They fought heavily on the New York stock exchange, with gleeful professionals on Wall street hopping in and out of the market for Alleghany stock. It did not move dramatically, but it moved enough for quick profits. The Murchison camp moved from Texas to a New York hotel suite to increase the offensive. It named a list of “ideal” men who would be installed on the Alleghany board when the victory flag was hoisted. They include a former Secretary of the Navy, the chairman of a publishing house and a bank president Mr Kirby’s men went to work on the list and accused one of the men selected of virtually ruining another company. Another of the men, a stock broker, was said to be angry at Mr Kirby because he had not sent him a Christmas card.

Mr John Murchison stepped up his attacks on Mr Kirby and called him downright useless—‘‘l don’t think he ever says "yes’ to a deal unless he’s forced into it.”

As the hour of Aowdown approaches the stockholders are still doubtful over whether Mr Kirby should be left in charge of Alleghany or whether the Texans will give them a better run for their money. Because of the exposes and name-calling, many stockholders are said to distrust both sides. Some are expected to ask for a third alternative today, perhaps one of their own number.—(Associated Newspapers Feature Service).