Marriage Broker Sonnabend

The Marrying Sam of the corporate merger business is a Boston pawnbroker's Harvard-educated son named Abraham Malcolm Sonnabend. In the past four years Sonnabend has mated a score or more moneymaking companies with money losers, using the losers' losses as a tax offset against the moneymakers. In so doing, Sonnabend, who learned to wheel and deal as a Boston and Miami real estate operator, has gained control of a hotel, manufacturing and retail empire with 1957 sales of $179 million. Top earners: Hotel Corp. of America with operating revenues of $63 million, Botany Mills with sales of $96 million, Consolidated Retail Stores with sales of $20 million.

Last week, at 61, Sonnabend prepared to take on the biggest matchmaking job of his career. At ailing Studebaker-Packard's request, he was ready to move into the company, find profitable nonautomotive companies to merge with it to take advantage of Studebaker's $135 million in tax losses. For Studebaker a merger is a matter of desperate urgency. Down to less than 1% of the auto market this year (from 2.4% in 1954), the company hopes to make a comeback this fall with a new small car, priced under $2,000. But to keep going, Studebaker must also refinance $55 million in bank and insurance company notes, some now falling due, hopes to issue preferred stock for part of it.

Studebaker President Harold E. Churchill asked Sonnabend to come in and work fast because Studebaker's five-year carryover period for tax losses starts running out next year. Last week Sonnabend reported that he had nine prospective bridegrooms with combined earnings before taxes of $30 million a year--more than enough, he said, to offset Studebaker's past losses. Sonnabend was eager to get on with the wedding, but Churchill wanted to hold up formal publication of the banns until the company's creditors have approved plans to recapitalize, make the debt load more manageable.

As Sonnabend got ready, Curtiss-Wright, which had hoped to work the same kind of rescue operation for Studebaker, prepared to move out. Two years ago Curtiss-Wright got a management contract to run Studebaker, plus an option to buy 5,000,000 shares of stock at $5 a share (which runs out this November), plus the chance of merging Studebaker into Curtiss-Wright if it could cut Studebaker's huge losses. But Curtiss-Wright had no success. Fortnight ago Studebaker reported that its losses in the first six months of this year soared to $13,314,165, almost double the losses in the same period last year.

The final say on bringing Sonnabend into Studebaker will have to come from the stockholders. To take on the diversification job, Sonnabend is asking for an option to buy 500,000 shares of Studebaker stock during the next five to ten years at 95% of the market value on the day of a merger, plus a place on the board.

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