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Well-Hedged. Murchison and Richardson jumped at the deal, because they know that Bob Young is an expert at parlaying shoestrings into golden chains. Early this year Young sold Murchison a 24% interest in his huge Investors Diversified Services, Inc., whose three subsidiaries sell savings certificates and other securities (TIME, Sept. 15, 1952). Murchison's $5,000,000 investment is already worth more than $7,000,000.
The New York Central proposition was just the kind Murchison likes. He and Richardson did not have to put up a cent of their own money, but borrowed the entire $20 million needed to buy 800,000 shares of Central stock from the Chesapeake & Ohio Railway, which until February was controlled by Young. They got more than half the money from Young's own Alleghany Corp. and his business associate, Allan Kirby. With it, they got an option to sell 50% of the stock back to Alleghany at the $25 price they paid (current market value: about $22).
The real reason for the purchase, of course, was to vote the 800,000 shares in favor of Bob Young at the Central's annual meeting May 26. Last week New York Supreme Court Justice James B. McNally turned down the Central's plea for an injunction to block the Texans from voting the stock on the ground that the sale violated an ICC order. Unless the Central can find new legal objections, it looks as if the Texans will be able to vote the shares, which constitute about 12% of the total, and bring Young & Co.'s holdings to 1,300,000 shares.
But the vote on the other 5,318,530 Central shares did not seem to be going in Young's favor. About 40% is held by brokers for their customers. The largest such holdings are in the hands of Merrill Lynch, Pierce, Fenner & Beane, the biggest brokerage house in the world. It holds 415,000 shares owned by 1,752 of its customers. About three-quarters of that vote is in, and the Central management has 60%, though individual stockholders have voted 3-1 for Young.
A month ago, Murchison predicted: "We'll get 90% of the proxies." Richardson, who loves to josh his wheeling-dealing friend, picked him up: "Bet you $10 million we don't." Said Murchison: "Well, if we don't get 90%, we'll get 55%, and that's enough."
No matter what happens in the Central deal, Murchison is busy on a bigger transaction. Last week, in Canada, the Alberta government, by okaying a gas-export permit, in effect gave the go-ahead to Trans-Canada Pipe Lines, Ltd. to build a 2,240-mile pipeline from Eastern Alberta to Toronto and Montreal, with a planned spur to Minneapolis-St. Paul. The $3 million Trans-Canada pipeline, which will be half owned by Murchison's Canadian Delhi Oil, Ltd., will be nearly half again as long as the Big Inch. Murchison and his Canadian partners still have to raise the money. But with all the natural gas in Alberta, including close to a trillion cubic feet owned by his Canadian Delhi, and the waiting markets of Eastern Canada and the U.S., Murchison expects no trouble, plans to have it built by 1955.