RAILROADS: The Popular Stockholders

Stockholders of the Baltimore & Ohio Railroad were as popular last week as a fare cut to commuters. Three weeks ago the money-making Chesapeake & Ohio Railway offered to buy 80% of the B. & O.'s stock, and won the blessing of B. & O.'s management. Last week the New York Central Railroad, afraid of such a merger, which would create the second largest railroad in the U.S. and make competitive life hard for the Central, also made a move to woo B. & O. stockholders.

It said it wants to acquire 60% of the common stock.

On the face of it, the Central's seemed the better offer: an exchange of 1½ shares of Central stock plus $9 in cash for each share of B. & O. common stock. Total value: $42.65. some $7 more than the

C. & O. offered. But the Central is paying no dividends, while the C. & O. has paid dividends all but two years since 1889, currently pays $4 per share. The C. & O., which had guessed down to the dollar how far the Central would go to top its offer, is counting on its sound financial position and dividend prospects to impress B. & O. stockholders more than the Central's bait.

The B. & O. itself is heavily in debt, running in the red. and putting forth meager dividends. Thus, it stands to gain from a merger.

Wall Streeters doubted whether the Central offer was good enough to gain control of the B. & O. But it seemed good enough to block the C. & O.'s effort to get 80% of the B. & O. stock—and blocking the C. & O. is New York Central President Alfred E. Perlman's immediate objective. If a major proxy fight ensues, the much-wooed B. & O. stockholders will be in a position to pick and choose—or to force the Central and C. & O. to talk compromise terms with one another. Railroadmen felt that the two competitors might not really be very far apart: Perlman's publicly stated aim is a three-way merger of the Central, C. & O. and B. & O., and more than one railroadman believes that is exactly what the C. & O.'s canny president, Walter J. Tuohy, is ultimately after too.