Aniline, My Aniline

The 36 financiers, lawyers and Government officials gathered in the arch-ceilinged office of Attorney General Nicholas Katzenbach fell suddenly silent. Ceremoniously, an aide sliced open an envelope and passed its contents to Katzenbach, who read aloud the figure on a slip: $29,476. The audience buzzed with surprise, and one onlooker gasped: "Incredible! Let them have it." The figure, said the Justice Department's key financial adviser, was "beyond their wildest dreams."

So last week, after 23 years of courtroom haggling, foreign intrigue and Wall Street speculation, the U.S. Government finally unloaded General Aniline & Film Corp., the giant industrial combine that it had confiscated in 1942 on grounds that the Swiss owners were fronting for I.G. Farben, the German chemical cartel. At $29,476 a share for 11.2 million shares, the Aniline stock offering brought in $329,141,926.49. It was the largest competitive stock offering in history, ranking second in size among all offerings only to the Ford stock sale in 1956. Placed on the market at $30.60, the shares were completely snapped up by investors, who drove the price up to $36 before it settled back to $32 at week's end.

Behind Locked Doors. The winner in the competition for Aniline's stock was a syndicate of 215 underwriters led by Manhattan's Blyth & Co. and First Boston Corp.; the cry of "Incredible!" had come from the representative of a competing syndicate of 350 companies headed by Lehman Brothers, Kuhn, Loeb & Co. and two others. Blyth and First Boston bid $1.21 a share more than the competition, and Blyth's board room back in New York broke into pandemonium when the word was flashed from Washington. The sixth largest U.S. underwriter and the biggest over-the-counter dealer, Blyth had formed the syndicate to bid for Aniline way back in 1945, had kept its members together for two decades while the legal battle over Aniline went twice to the U.S. Supreme Court and once to the World Court.

How had the syndicate decided on its price? As the sale date neared, its managers carefully scrutinized Aniline's performance, interviewed its executives, visited its 14 plants. They also gauged the probable public demand for stock on the basis of the price of the 61% of stock already on the market and of the advance orders for the Government's 93%. Finally, after each member had suggested a price, the syndicate members agreed on their bid behind locked doors less than an hour before the sale. That $329 million figure--33 times what Aniline earned per share in 1964 ($10.7 million) and 27 times the top forecast for its 1965 net--was high enough so that 25 firms withdrew from the syndicate. The risk was considerable: had the syndicate overestimated what the public would pay by only a little more than $1 a share, it stood to lose several hundred thousand dollars (plus the $900,000 cost of the transaction) instead of pocketing its $12.5 million underwriting fee.

Splitting the Proceeds. Aniline's Swiss owner, a holding company called Inter-handel, will net $121 million from the sale because of former Attorney General Robert Kennedy's controversial decision to settle its ownership claims out of court by splitting the proceeds. The Government's $208 million will go into a war-claims fund to pay U.S. citizens for property and (in some cases) relatives lost during World War II. As for the anxious new investors, they hope to profit by the improvement in General Aniline's prospects already begun under research-minded President Dr. Jesse Werner. Many are also aware that two other German-owned companies seized by the U.S. in World War II (Rohm & Haas and Shering Corp.) jumped ahead dramatically after they were sold to private enterprise.

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