Weinstock Wins

For three of the four men who lunched together last week in the executive dining room of Britain's Associated Electrical Industries Ltd. on Grosvenor Place, London, the menu included a side order of crow. The humiliation of A.E.I. Chairman Sir Charles Wheeler, Chief Executive Sir Joseph Latham and Finance Director John Barber stemmed from the circumstances of the lunch. Their guest, General Electric Co. Ltd. Managing Director Arnold Weinstock, 43, had just acquired their company in one of the bitterest takeover battles in British business history and had come to Grosvenor Place to begin putting it into effect.

In a country where titles and family count heavily in business, Weinstock is the son of an immigrant Polish tailor. He was educated at state schools instead of Eton or Harrow, graduated from the University of London rather than Oxford or Cambridge. Weinstock joined General Electric--no kin to the U.S.'s G.E.--in 1961 when G.E.C. bought out Radio & Allied Holdings, an electronics firm founded by his father-in-law.

From Red to Black. Because his father-in-law's holdings made him G.E.C.'s biggest stockholder, Weinstock soon became managing director. Since that time he has ruthlessly turned the stagnant company around. Unprofitable heavy-equipment divisions have been sold off, red-inked offices closed, personnel trimmed, including a cut in the headquarters office force from 2,000 to 200. Weinstock set up new accounting procedures to monitor G.E.C.'s progress, and executives who did not measure up to his operating standards were promptly fired or allowed to resign. In five years, G.E.C.'s earnings quadrupled to $25.4 million, after taxes, on sales of $458.5 million; the company became Britain's third largest electric-equipment manufacturer and one of the country's most profitable operations. This year, with sales of consumer goods off in a sluggish economy, G.E.C.'s earnings have dropped 14% though.

Associated Electrical, meanwhile, was doing worse. Although it was next to the largest in the industry (after English Electric), its earnings of $37.5 million last year were 47% lower than the year before. Thus, when Weinstock offered to buy out A.E.I, for $448 million, some stockholders, including the Church of England (which owns stock worth $8,400,000) leaped at the chance. In a six-week battle during which both sides spent about $550,000 on advertising alone, Weinstock won about 70% of A.E.I.'s shares.

With the Giants. After merging the two companies into a $1.2 billion firm, Weinstock will repeat the renovation he carried out at G.E.C. He is expected to phase out unprofitable manufacture of heavy generators and transformers, concentrate on telecommunications and electronics, in which the company can compete against such foreign firms as ITT and General Telephone & Electronics Corp. of the U.S., Europe's Philips and Siemens A.G. and Japan's Nippon Electric Co. Ltd. "The future," insists the young executive, "lies with the giants." And Arnold Weinstock obviously classes himself with the giants.

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