Wards' New Package

Just over a year ago, Chairman Robert Elton Brooker of Montgomery Ward & Co. reached out for a major diversification in his effort to end Wards' long streak of low profits--and was rebuffed. Stockholders of Los Angeles-based MSL Industries Inc., with $116 million per year in sales of everything from industrial fasteners to electronic components, rebelled at fusing their young manufacturing company with a troubled old retailer. Last week Brooker found another possible partner, and this time his prospects looked a lot brighter.

Directors of Wards and Container Corp. of America, the largest U.S. producer of paperboard packages (1967 sales: $463 million) agreed to wrap their fortunes in the same carton by forming a holding company. With Brooker, 63, as chairman and chief executive, and Container Corp. President Leo H. Schoenhofen, 53, as president, the holding company would run both firms as autonomous subsidiaries retaining their own identities. Stockholders of both companies still must approve the combine, but Brooker cannily concocted a deal so sweet that Container shareholders, at least, should find it hard to spurn.

Profitable Options. Stockholders can opt to trade a share of Container Corp., worth $38 at week's end, for a $45 share of convertible preferred stock in the yet-to-be-named holding company. Or 49% of them can have a $55 debenture paying 61% interest for 20 years--a security that analysts figure could be sold immediately for a tidy profit. Wards' stockholders can swap only one share of Wards for one of holding-company common stock, but they have a strong incentive to do so. Container Corp.'s profits of $32.9 million last year were almost double those of Wards, which netted only $17.4 million despite near-record sales of $1.88 billion.

Even with Container Corp. in its fold (and combined revenues of $2.36 billion for last year), Montgomery Ward would still rank third in its field, well behind Sears, Roebuck and a bit below J.C. Penney. In his seven-year struggle to revitalize Wards, Tom Brooker has unabashedly borrowed many tactics from Sears, where he rose to a vice presidency for manufacturing before leaving in 1958 to head appliance-making Whirlpool Corp. He closed marginal outlets, invested much of Wards' pile of idle cash in big new suburban stores, revamped sagging catalog sales, upgraded merchandise lines, established long-term contracts with suppliers. Following Sears by entering finance, Brooker picked up the Pioneer Trust & Savings Bank of Chicago in 1966, later formed an insurance subsidiary. To help introduce Sears methods, he even hired scores of his competitor's executives, including Edward S. Donnell, Wards' president since 1963.

Counting on Controls. Wards' long-awaited turn-around has barely begun. Last week Brooker made it clear that he is counting on Container for help. "The corporation has a fine record of training people in controls," he said. "We'll benefit from this." Even more important, by pooling their resources both companies will greatly reduce their vulnerability to takeover attempts by other suitors.

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