Prize Union

For more than a year, Chicago's Pure Oil Co. has been much like the princess of a Norwegian fairy tale: sitting on top of a hill of glass, she watched as a host of suitors tried to negotiate the slippery slope to win her hand. Pure would welcome a corporate marriage, all right: although its sales in the past ten years have risen 64% , to $630 million, gas wars and short supplies of Pure-produced crude have cut earnings to a disappointingly steady $30 million. Plenty of wooers have tried the hill but slipped on Pure's fussy terms: Atlantic Refining, Petrofina, Hercules Powder, a syndicate comprised of Loeb, Rhoades, Allied Chemical and Consolidation Coal, and a group that includes DuPont family members. Last week someone finally seemed to be reaching the hilltop. Pure's board voted to carry on merger negotiations with California's Union Oil Co.

Pure found Union's proposal the most attractive of all. Union suggested an exchange of stock rather than out right purchase; the move would free Pure's 48,000 stockholders -- among them, the unsuccessful Loeb, Rhoades --from paying capital-gains taxes on a sale. Unlike Atlantic, which also offered a stock swap, Union appears willing to retain Pure as a separate division with its old brand names and management.

The merger would be a marriage of convenience. Union has ample crude oil to supply Pure's outlets in 24 Mid west and Southern states. The deal would also broaden Union's marketing outside of the highly competitive West Coast area. One important Union stock holder, however, is not impressed. Ship ping Magnate Daniel K. Ludwig, who in 1963 bought 14% of Union stock as a long-term investment, argued that the merger would dilute stock values. He prepared to sell his 4,100,000 shares back to the company for $146 million. The sale will be the largest single private stock transaction since Ford family stock in Ford Motors was sold in 1956, and will leave Ludwig with pretax profits of $45 million.

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