Have Cash, Will Travel

As one of the nation's biggest finance companies, Baltimore's Commercial Credit Co. (assets: $3.3 billion) generates the kind of cash flow that businessmen dream about. That, together with the fact that its management owns less than 1% of the company's stock, has made it a prime target for takeover. When Manhattan-based Loew's Theaters Inc. undertook to win control of the company with a tender offer to shareholders last month, Commercial Credit's board decided that it would much prefer a partner of its own choosing. Last week it moved to sidestep Loew's by agreeing to merge with Minneapolis' computer-making Control Data Corp.

The deal, involving at least $580 million in Control Data securities, must be approved by shareholders of both companies--and that could prove to be a major hurdle. The reason is that Loew's, apart from whatever additional stock it may pick up through its tender offer, is already Commercial Credit's biggest stockholder, having bought almost 10% of the company's shares on the open market during the past year. And Loew's President Laurence Tisch, assailing the proposed get-together with Control Data as a "shotgun wedding," was plainly in no mood to surrender.

In urging stockholders to reject Loew's bid, Commercial Credit argued that the theater-and-hotel operator, besides being a far smaller company, was in fields incompatible with its own. By contrast, said Commercial Credit Chairman L. S. Willard Jr., a merger with Control Data would be a "natural fit." As evidence, he pointed to his company's own budding involvement in computer operations. Already well diversified, with subsidiaries in insurance and manufacturing lines (printing presses, bearings, meat packing), Commercial Credit last January set up a data-processing operation in a joint venture with Radio Corp. of America.

The proposed merger would hold special advantages for Control Data. One of the fastest-growing computer concerns, it registered earnings during fiscal 1967 of $8.4 million on revenues of $245 million, and is running far ahead of that pace so far in 1968. President William C. Norris has had to scramble for the cash to keep the expansion going. Commercial Credit's resources should help Norris increase computer sales abroad, also provide the financing his company needs to strengthen its position in the competitive --and lucrative--leasing field.

Commercial Credit is confident that Loew's tender offer, which expires at the end of this week, will fail to attract enough stock to win control. But in one sense, Loew's stands to win even if it loses. The takeover struggle has sent Commercial Credit's stock soaring, with the result that Loew's last week showed a paper profit of more than $20 million on its holding in the company.

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