The Allegheny Battle

The widow of battling Railroadman Robert Young resigned in a huff from the board of the multimillion-dollar Alleghany Corp. last week--and thus set the stage for what promises to be 1960's liveliest proxy scrap. Anita O'Keeffe Young,* still ambitious and aggressive at 60-plus, quit to express her opposition to cold, stolid Chairman Allan P. Kirby, 67. It was a bitter end to a 25-year association. Kirby's inherited Woolworth millions had bankrolled Bob Young from the 19305 onward, had put him in command of Alleghany, which controls the New York Central Railroad, the $3 billion Investors Diversified Services group, and 50% of the Missouri Pacific Railroad's Class B stock. Last week Wall Streeters were betting that Anita Young would place her considerable savvy and stockholding behind one or more of the high-powered outsiders who are eager to wrest control of Alleghany from Kirby.

The Price of Surrender. Day by day, thin-lipped Anita Young has been growing more dissatisfied with Kirby's management. Her pride was bruised because she felt Kirby was not keeping her properly informed of company affairs. Insiders buzzed that in the two years since Bob Young ended his life (and left all his Alleghany holdings to his widow), Kirby had spoken to her at length only twice, both times at board meetings.

To keep abreast of matters, she cultivated a close contact with tall (6 ft. 4 1/2 in.), young (35) Executive Vice President David Wallace, a Bob Young whiz kid. Anita Young urged Chairman Kirby, who is also president, to lift Wallace to the presidency. Instead, after Kirby heard that Wallace was huddling with Boston Industrialist Abraham Sonnabend, who wanted to take over Alleghany (TIME, Nov. 23), Kirby fired Wallace. Anita Young fumed, pointedly refrained from endorsing Kirby against Sonnabend.

The last straw was Kirby's capitulation to the demands of a minority stockholder, Randolph Phillips, who had charged Young, Kirby and the oil-rich Texas Murchisons with mismanagement of Alleghany assets. Not only did the Kirby-engineered settlement force Mrs. Young to pay $1,050,000 to the Alleghany treasury (TIME, Jan. 4), but--far worse in her eyes--it gave victory and prestige to Randolph Phillips, whom she considers a mortal enemy.

The Coming Alliance? If she wished to, Anita Young could very well tip the scales against Kirby. She owns 100,117 shares of Alleghany common and 170,020 shares of convertible preferred (market value: $9,978,000). Under Alleghany's balloting rules, in which the common elects five of the nine directors and the preferred the other four, she probably has enough preferred to vote in two directors.

Or she can convert her preferred into 905,314 shares of common, giving her 1,005,431 shares in all. (There are now 5.200,000 shares outstanding, plus war rants and preferred shares that can convert into another 8,200,000 of common.) Furthermore, Mrs. Young admires the business abilities of Millionaire Sonnabend (Hotel Corp. of America; Botany Industries, Inc.), who says he controls 700,000 shares. If they ally, the Young-Sonnabend total of some 1,700,000 shares could outvote Kirby's potential of 1,524,000 (he now controls 524,200 shares of common, has warrants and preferred that can convert into some 1,000,000 more).

Another possible ally is Millionaire Clint Murchison. He also was angered by Kirby's deal with Randolph Phillips because it cost the Murchison interest $700,000 plus 24% of the votes in Investors Diversified Services. Also in the wings: William Zeckendorf, boss of Webb & Knapp, which has borrowed millions from Alleghany. He is a business crony of Sonnabend and would like to do some wheeler-dealing with the Central's choice real estate. Finally, there is Randolph Phillips himself, an expert financial infighter.

At week's end there was no word from the anti-Kirby camp. But if war is started, Wall Streeters feel that Allan Kirby will be in for a Pier 6 brawl.

* Sister of Georgia O'Keeffe, the best living U.S. woman painter.

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