Hold the French

Waving American flags and brandishing homemade placards reading GO HOME, FRENCHIE, a contingent of Copperweld Corp. employees marched past the French embassy in Washington recently, led by a man on stilts tricked out as Uncle Sam. That spectacle was only part of a wide-ranging fight being waged by workers and officials of Pittsburgh-based Copperweld, a specialty metal producer, to avoid being acquired by Imetal, a giant French mining concern controlled by the Rothschild family. Three weeks ago, Imetal made a tender offer to buy all of Copperweld's stock for about $111 million. Since then the clash has developed into one of the fiercest corporate takeover battles in recent memory, marked by picketing, politicking and troubling antiforeign overtones. Last week Copperweld took its fight to a federal court in Pittsburgh to get a preliminary injunction to block the offer.

Octopus Defense. By week's end, after hearing witnesses from both sides, senior Judge John L. Miller had not reached a decision. Whatever the outcome in Pittsburgh, however, the legal fight is likely to drag on through several more courts before it is resolved. At last week's hearing, Copperweld officials, led by Chairman Phillip Smith, consistently sought to portray their company as a small American firm in danger of being gobbled up by a predatory foreign octopus. The Copperweld executives also insisted that Imetal's proffered price is too low for a firm that has a book value of $160 million. The French company has offered to pay $42.50 each for Copperweld shares that sold at $34.50 just before the fight began and closed last week at $38.13.

To counteract Copperweld's arguments, Imetal unexpectedly flew in its urbane chairman, Baron Guy de Rothschild, to testify. In a clear British accent, Rothschild told the court that he will neither liquidate Copperweld, siphon off its profits or technology to other subsidiaries or shake up its management, "which is considered excellent." Indeed, Rothschild asserted, Copperweld would prosper under Imetal.

Imetal is a holding company formed last November to manage about 70 subsidiaries engaged in mining (nickel, lead, iron ore, zinc), metal processing, real estate, transportation and other ventures which the Rothschilds own or hold an interest in. Last year the group collectively posted after-tax income of $32.5 million on sales of $1.1 billion. The new firm's interests reach from Europe to the South Pacific, Africa and South America. Copperweld would give it a sturdy beachhead in the U.S., where the Rothschilds have no major operations now. Buying into American businesses has become attractive for more and more foreign firms because they can pick up bargains by paying in undervalued dollars still available in huge amounts around Europe. Moreover, foreigners correctly judge the U.S. to be recovering from world recession faster than other industrial nations.

During the past year or so, such well-known U.S. firms as Bantam Books, ESB, Inc., formerly Electric Storage Battery, and Magnavox have been bought out by foreign companies. But the juiciest attraction could be Copperweld. Largely because of successful management efforts to diversify its line of alloyed steels and specialty tubing used in construction, the company has been consistently profitable. Despite the recession, Copperweld sales in the first half of 1975 climbed to $162.5 million from $150.6 million a year earlier. Profits jumped from $6.2 million to a record $8 million. Copperweld is particularly vulnerable to raiders because its management controls a mere 1% of the stock.

In its efforts to thwart Imetal, Copperweld has rallied impressive support--with the help of its image maker, Ketchum, MacLeod & Grove, Pittsburgh's biggest public relations firm. Hundreds of Copperweld's 4,300 employees have ridden buses into Washington and Manhattan to picket against the takeover, urged on by United Steelworkers President I.W. Abel. Republican Senators Hugh Scott of Pennsylvania and Robert Taft of Ohio, where Copperweld operates two plants, have issued statements supporting the Pittsburgh firm. Pennsylvania Governor Milton J. Shapp sent a wire to Smith stating his belief that Imetal wants Copperweld "as a source of cash only and has no intention of reinvesting profits in the U.S." Pennsylvania Congressman John Dent recently held hearings in the Pittsburgh suburb of Glassport to enable Copperweld workers and suppliers, many in hard hats and work shoes, to air arguments against the takeover.

Fresh Doubts. The battle in Pittsburgh is unlikely to give pause to the growing number of American empire builders who are trying to take over corporations by tender offers. But it is certain to raise fresh doubts for many foreign businessmen, especially those in the newly rich Arab states, which have only just begun to seriously consider long-term investments in U.S. industry. And that is not likely to please Administration economists, who are looking for an infusion of foreign capital to help the nation's balance of payments.

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