Word: murchison
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Texas Oilman Clint W. Murchison, who likes nothing better than a big, complicated deal, last week stepped into a real brain-twister. In the process, the big wheeler-dealer hoped to get his first listing on the New York Stock Exchange...
...Pittsburgh, the money-losing (first-half loss: $414,511) Follansbee Steel Corp. announced a two-way deal to dispose of both its corporate shell (i.e., big-board listing and cash) and its physical assets to two separate groups, one headed by Murchison and the other by Manhattan Machine-Tool Maker Frederick W. Richmond. For some $9,000,000 cash, Richmond will buy up Follansbee's steelmaking plants, warehouses and inventories, continue to operate the company. Follansbee's corporate shell (with $9,000,000 in the till and no plants) will then merge with two profitable Murchison firms: Chicago...
...deal looked like a good one all around, especially for Murchison. If it goes through, he will still have 46% control of his two moneymaking firms. In addition, he will have a handy carryover tax advantage from Follansbee to apply to his two companies. Since Follansbee's book value is actually $16 million, the net loss (after tax adjustments) on the sale is $5,000,000, of which 52% can be charged off against the new corporation's income. Possibly the biggest reason for the deal was that Murchison will have a listing on the New York Stock...
...this complicated maneuvering? The reason, said Murchison, is that "Young is gun-shy." Young feared that if Alleghany had bought the stock outright in the first place instead of lending the money to the Texans, the Interstate Commerce Commission would not let him vote it in the Central fight. His fears proved baseless, since ICC later ruled that Alleghany could have bought the stock itself...
...their favor to Young, the Texans now have 300,000 Central shares that cost them nothing out of their own pockets. They expect to hold on to the shares, said Murchison, "until the stock reaches $100. Then we'll take a look...