"I Am a Conglomerate"

Some two years ago, Wall Street whiz-bang Meshulam Riklis assigned himself a Herculean task. He aimed to take over Schenley Industries, Inc., one of the nation's biggest distillers (1967 sales: $518 million), through a merger with Glen Alden Corp., part of the $1.4 billion sales complex that Riklis, 44, has shuffled together.

Riklis took first aim at Schenley's eccentric founder, chairman and controlling stockholder, Lewis Solon Rosenstiel, 76. The prospects hardly seemed promising. Rosenstiel had declared that 'I will probably never retire," and had exploded other merger deals. By last week, Riklis was closer to his goal than many an observer thought he ever would be--though ultimate control of Schenley was still much in doubt.

Riklis began his most recent push ast month when he went to Miami to make his case at Rosenstiel's winter lome. His offer was one that not even Rosenstiel could turn down. For 945,000 Schenley shares owned or controlled by Rosenstiel, Riklis agreed that Glen Alden would fork over a cool 575 million--or $80 a share for stock hat had been trading for around $65. Last week, with the Rosenstiel stock in hand, Riklis was readying an offer, valued at $410 million, for the remaining Schenley stock.

"Effective Nonuse." Should it succeed, the Schenley takeover would cap a comeback for Riklis, a Palestinian immigrant whose seesawing fortunes have fascinated observers on Wall Street for years. Riklis came to the U.S. in 1947, taught Hebrew and sold stock in Minneapolis until the mid-1950s, when he was struck with what he now calls "the effective nonuse of cash"--or the technique of using borrowed money to buy undervalued companies, whose assets could provide the leverage for still larger takeovers.

Backed initially by a group of Minneapolis investors, in less than a decade Riklis spun together a retailing empire under the Rapid-American Corp., which controlled McCrory Corp. whose 1,500 stores (McCrory-McLellan-Green, National Shirt, Lerner) racked up $554 million in sales in 1962. By then he was vastly overextended. When grandly predicted earnings failed to materialize, McCrory's stock tumbled and Riklis' entire colossus seemed headed for collapse. "God," wailed Riklis at one point, "has added to our agonies."

Scrambling for survival capital, Riklis sold off Rapid-American's businesses (paint, printing and clothing), leaving it a mere shell. McCrory, too, came in for a paring. Riklis then bought control of Glen Alden Corp., a conglomerate with interests in coal and leather goods (which he sold) and textiles and R.K.O. theaters (which he retained). By 1965, such shufflings yielded some $50 million, which Riklis soon put to work. Since early 1966, Glen Alden has bought into building materials, B.V.D. clothing, and only three months ago, the diversified Stanley Warner Corp., whose interests include Playtex bras, movie theaters and throat lozenges.

Irate Charges. Having won over Rosenstiel with tactics that included a personal investment of $350,000 in the purchase of Rosenstiel's six-story Manhattan town house, Riklis ran into some new obstacles to the $410 million takeover. There were new rumors that P. Lorillard & Co., the big cigarette, maker which had been rebuffed by Rosenstiel in an earlier merger attempt, was renewing its effort. These were reinforced when the Schenley board failed to take any action acknowledging the Riklis bid.

For the other Schenley stockholders, Riklis has announced terms quite different from the Rosenstiel purchase. Though Rosenstiel was paid largely in cash, other shareholders will be offered a package of cash, long-term debentures and warrants for their stock. The terms were hardly made known when last week three irate Schenley stockholders brought suits to block the deal. Among their charges: that Riklis would merely raid Schenley's treasury to recoup the merger costs.

Riklis, of course, rejects such accusations, has endless faith in a historical inevitability that his operations will continue to expand. "I'm a conglomerate," he explains. "I am what I am. This is what interests me."

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