CORPORATIONS: Merger for Colt

• Share

Leopold D. (for Dias) Silberstein, 51, likes to call himself a "professor of sick companies." In the past eight years, he has acquired more than a dozen companies, some sick, some healthy, and built up a thriving empire called Penn-Texas Corp. (TIME, July 25). Last week Professor Silberstein took over a stretcher case: Colt's Manufacturing Co.

The Raiders. Beginning in 1948, the venerable, 118-year-old gunmaker was dealt a crippling blow by a group of raiders who bought up a large chunk of stock. The group, led by David A. Goodkind (a close associate of Louis Wolfson), won representation on the board. They forced the company to offer tenders to buy up stock at an average price of $52 a share, though the stock was selling for under $40 when the Goodkind group started to buy. Thus Colt's was forced to pay out $6,500,000 to buy out the Goodkind group and others. Colt's tried to diversify, but was unable to recover and looked around for merger possibilities. Colt's directors approached Silberstein, and he offered $7,200,000 for the company (through an exchange of Colt's stock for shares in Silberstein's Penn-Texas). By the deal, Silberstein gets a cash reserve of more than $1,000,000 and

Colt's gets help to diversify further.

Financier Silberstein built his empire by a succession of similar moves. A Berlin Stock Exchange member at 21, he fled Hitler's regime in the early '30s, after turning most of his investments into cash. During a brief U.S. visit, he invested $50,000 in depressed Cities Service and railroad bonds; the investment soared and gave him the capital he needed when he landed in the U.S. for good in 1947.

Silberstein decided that venerable Pennsylvania Coal & Coke Co. was about the sickest company in one of the sickest U.S. industries. In a year he had 75,000 shares (of 148,000 outstanding) and won control. With Pennsylvania Coal (later rechristened Penn-Texas) as a base, Silberstein started buying oil and gas properties, a warehouse terminal, Crescent Co. (wire and cable), and Quick-Way

Truck Shovel Co., a manufacturer of heavy earth-moving equipment.

Up the Ladder. Next on Silberstein's list in 1953 was Industrial Brownhoist Corp., a Michigan industrial-machinery maker which had more than $1,000,000 in cash reserves. The following year, Silberstein used Penn-Texas capital to buy up 51% of the stock in Connecticut's Niles-Bement-Pond, a machine-tool mak er with plenty of cash in the till. After a bitter proxy fight, Silberstein won control, made the company a Penn-Texas subsidiary. Last week he changed the name of the company to Pratt & Whit ney Co., the name of a company it had once absorbed.* With Colt's assets of $9,000,000 in his holster, it looked as if Silberstein had taken another big step towards his an nounced goal of making Penn-Texas one of the biggest U.S. corporations.