Ling Sticks with Steel

Forced to choose, James J. Ling decided last week that he would rather be in the steel business than in airlines and cable manufacturing. At the same time that he reported a 90% plunge in last year's operating profits of Ling-Temco-Vought, his once high-flying conglomerate, Jim Ling moved to settle a federal antitrust suit arising from his corporate acquisition of Jones & Laughlin Steel Corp. In order to hold onto the nation's seventh largest steelmaker, LTV will have to sell its controlling interests in Braniff Airways and Okonite Co. LTV also agreed in principle to refrain from "certain activities" for ten years --which probably means no more major acquisitions for that period.

Finding a Buyer. Acquisitive LTV has expanded since 1957 from an obscure electrical contractor into a $3.75 billion-a-year corporation. Its takeover of Jones & Laughlin in 1968 was the largest conglomerate merger in history. After paying a very rich $85 a share --or a total $425 million for control of the company--Ling has seen his investment tumble by 59%. That Ling would now choose to get out of growth businesses and stay with a troubled company in a stagnant industry seems surprising. But LTV stands to collect some $17.5 million in dividends from J. & L. for last year, while Braniff paid only $5.1 million and Okonite $2.1 million.

In effect, the Justice Department simply approved of what Ling was already trying to do. Financially hard-pressed, he put LTV's 55% holdings in Braniff on the block several months ago. Now the trustbusters have given him three years to sell out. The merger trend in the airline industry should make Braniff relatively easy to dispose of. Wall Streeters think that Pan American and Eastern are potential buyers. On the other hand, LTV's unsuccessful attempt in January to sell Braniff to Norton Simon Inc. may indicate a desire to find a buyer outside the airline industry and avoid possible objections from the Civil Aeronautics Board. Ling's sale of 82% of Okonite, which lost money last year, may be more difficult.

Conglomerate Decline. It was probably not coincidental that Richard McLaren, the U.S. antitrust chief, told a Senate hearing last week that a new law to curb conglomerate mergers was no longer urgently needed because the number of such tie-ups declined in 1969. He claimed that the department's "strong stand" against conglomerate mergers had helped to reduce them. The LTV-Jones & Laughlin case was one of five antitrust actions filed last year in a drive against conglomerates. None of the cases has yet been tried in federal court. The Justice Department is likely to continue attacking big acquisitions, but the move toward giving executives a choice of which companies to sell seems quite a flexible precedent.

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