Big Man on the Big Board

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.

In 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's Consumers Co. (concrete) and Frontier Chemical Co. (chlorine, caustic soda) of Wichita, Kans. Follansbee stockholders, whose stock will be worth $20 a share after selling their plants, may exchange it for stock in the new merged Murchison corporation.

The 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 Exchange. Then Murchison can use Follansbee (under a different name) as a holding company to which to merge any number of his interests and find a big national market for the stock.

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