Three Who Watch, Wait and Strike

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A corporate prowler since the late 1970s, Icahn has undertaken a major corporate raid about every six months. He buys stock in companies that he thinks are undervalued and then begins to tell the management how to run the business. That is hardly welcome news to executives, who usually try to get court orders to stop him from acquiring more shares. Icahn's most controversial takeover before his current fight with Phillips came in 1982, when he went after Dan River, a Virginia textile company. Residents of Danville rose up in protest against the aggressor from the North, and more than 100 of them began buying Dan River stock as a sign of local support. After six months of struggle, company officers bought up the public stock and turned Dan River into a private firm. Icahn, who had started buying shares at $12, sold out for $22.50, for a total profit of $8.5 million. After his victory, Icahn named his new German shepherd attack dog Shiloh in honor of the Civil War battle in which the North defeated the South.

A Greenmailer. One of Icahn's partners in the Phillips struggle is Saul Steinberg, 45, an expert in the fine art of greenmail. In that corporate maneuver, an investor buys up a large block of stock in a company and threatens to take it over in hopes that the firm's management will become frightened and buy the shares back at a higher price than the stockholders can get, just to get rid of the raider. Last summer, in such a ploy, Steinberg bought 11.1% of Walt Disney Productions. After a long battle with Disney management, he sold the stock to the company for $32 million more than he had paid for it. Says Lee Isgur, a longtime follower of Disney stock for Paine Webber, a Wall Street broker: "It was obvious that it would be very difficult, if not impossible, for Steinberg to buy Disney. But he played the publicity game very well. The stock was bid up, and he made a nice profit." Just before Disney, Steinberg greenmailed Quaker State Oil Refining, buying 8.9% of the firm on the open market and then selling it back to the company. His profit: $10.5 million.

Steinberg has been making deals for a quarter of a century. While preparing his senior thesis on IBM at the Wharton School of the University of Pennsylvania in 1959, he got an idea. Why not buy IBM computers on credit and then lease them for less than IBM charged? His father staked him $25,000, and Steinberg in 1961 formed his own leasing company, which later became Leasco. By 1965, when it offered stock to the public, Leasco had assets of $5.4 million and was growing fast.

Steinberg then tried new gambits. In 1968 he bought Reliance Insurance, a company ten times larger than Leasco. In 1969, at the age of 29, he went after a real giant: Chemical Bank, then the seventh largest U.S. bank. In that case, though, Steinberg's reach exceeded his grasp. Says Paul Hallingby, a friend and longtime business associate: "The Chemical caper never had a chance of succeeding. They were an Establishment bank, and they had ways of heading him off." The bank had plenty of old friends and ties and could afford just to ignore the brash young man.