Victory for Texas
Old Henry Ford, with his hatred of "the Eastern bankers," would have been delighted. Flushed with consciousness of its mounting financial power, Texas had challenged a Wall Street titan to the biggest proxy fight in U.S. history. Last week Texas--in the persons of John Murchison, 39, and his brother Clint Jr., 37--won the day, snatched control of Manhattan's giant Alleghany Corp. away from Multimillionaire Allan P. Kirby, 68.
The Texas victory was the payoff on a cool gamble in which the odds at first seemed to favor the tough and elegant Kirby, heir of one of the founders of the F. W. Woolworth Co. Last year Kirby maneuvered the Murchison brothers out of control of Investors Diversified Services, the nation's largest (assets: $3 billion) complex of mutual funds, and returned control to Alleghany. Encouraged by their wily father, Oilman Clint Murchison Sr., 66, the young Murchisons replied by opening a fight for mastery of Kirby's Alleghany itself.
Out of the Ashtrays. The Murchisons (pronounced Murr-kiss-son) made no attempt to match Kirby in outright purchases of Alleghany shares; when the showdown vote came, they controlled only 2,800,000 shares v. Kirby's 3,200,000. Instead, with the aid of a host of Texas friends, the brothers concentrated on rounding up votes among the owners of the remaining 3,800,000 shares.
From a temporary Manhattan headquarters, staffed with secretaries from Dallas, executives who had been called in from Murchison enterprises all over the U.S. directed the fight with a quartermasterly eye for organization. The U.S. was divided into 80 zones, and dozens of Murchisonians were sent to canvass Alleghany shareholders in each area. An IBM computer kept a running count of the committed proxies; each scrap of paper that might offer a clue to the Murchison's strength or strategy was burned lest it fall into enemy hands. So zealous were Murchison solicitors that even after the final voting began at the Alleghany annual meeting in Baltimore, they were searching ashtrays for torn-up Kirby ballots that might give a lead to a disaffected shareholder whom they might convert. Says John Murchison: "We had a lot of friends working out of loyalty; their people were working for money."
Moving Time. Alleghany is a rich prize. Besides its I.D.S. stock, Alleghany owns 50,000 shares of Transamerica Corp., a West Coast insurance holding company, and $20 million of notes in Bill Zeckendorf's Webb & Knapp real estate company. But its biggest holdings are in railroads: it controls the New York Central, owns more than 50% of the class B stock of the Missouri-Pacific, and holds, in conjunction with the Central, 20% of the Baltimore & Ohio's common stock. In all, Alleghany controls companies with assets of about $6.7 billion.
Under Kirby, the Murchisons charge, Alleghany's vast potential was largely negated by stagnant investment policy. The brothers have promised to split I.D.S. stock, which is currently selling at about $280, by perhaps 10 for 1, and to increase I.D.S.'s $1.25 quarterly dividend. Above all, they hope to rechannel Alleghany's investments into growth industries.
To do this, the Murchisons are looking for a prestigious fulltime president for Alleghany (among the possibilities rumored: former Treasury-Secretary Robert B. Anderson, former Chase Manhattan Bank Chairman John J. McCloy). But the brothers may have a hard time finding a topflight executive willing to take on the job until Kirby makes known his plans. Despite his defeat, Kirby still owns 33% of Alleghany, and with a personal fortune of $300 million he might well decide to go back into the market and try to buy clear control of the company. The Murchisons, however, have their own advice for Kirby. Says John: "He should do what he used to tell us to do: either get happy or get out."
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