CORPORATIONS: Battle for United Cigar

Charles Green is a New York appliance dealer with a sharp eye for a quick profit. He buys stock in companies that make money, but pay small dividends, or none, then pressures the management into shelling out. Green’s latest target is United Cigar-Whelan Stores Corp., one of the biggest U.S. drug-and cigar-store chains (1,300 outlets).

Green, who has owned United stock since 1946 and now holds, with his family, 66,900 shares, started his attack by charging that President Walter G. Baumhogger and his associates “haven’t the faintest idea how to run the business profitably.” The management defended itself by relating how it had tenderly nursed the company from threatened bankruptcy 13 years ago, when its stock was “under water” (i.e., had a book value of minus $1,000,000), to 1950 sales of $74 million and a book value for the stock of $12,000,000. But, in letters to stockholders, Green had a ready retort: how come the company hadn’t paid a single dividend during its 13-year convalescence?

Strange Allies. President Baumhogger and associates then reopened a chapter in Green’s career that he would like to forget—a stormy 16 months when he was president of Minneapolis & St. Paul’s Twin City Rapid Transit Co. Green had won that job after threatening a proxy fight. In November 1949, he had gone to Minnesota, armed with 19,200 shares of T.C.R.T. and complaints about no dividends. As an ally in his fight, he picked up Nightclub Proprietor Isadore Blumenfeld, alias Kid Cann, a wealthy Minneapolis underworld character with a record of 30 arrests (two for murder) and three liquor convictions.

Green won and got the $40,000-a-year president’s job. While car riders howled bitterly, Green won approval of a fare hike from 12¢ to 15¢. He fired 800 employees, curtailed schedules, abandoned unprofitable trolley & bus lines.

The Showdown. Green’s Lawyer Fred A. Ossanna and other associates became so alarmed at the publicity that they quarreled with Green. By last December he was so leary of his old associates that he showed up for a stockholders’ meeting with a loaded revolver.

In July 1950 the Ossanna group had helped buy up Green’s shares. Green was eased out last March, and Ossanna put in as board chairman. Charlie Green hastened back to New York, a wiser and richer (by about $100,000) man.

In all this, United Cigar-Whelan’s management saw a baleful parallel to Green’s present maneuverings. But Green mustered enough votes to force his foes to hold a special stockholders’ meeting.

This week the ballot count was announced. Green polled more votes than the management (1,010,000 to 598,000), but lacked the majority of all common shares (2,307,000) needed to unseat the management at a special meeting. Faced with probable defeat at the next regular meeting (where only a majority of those present would be needed), the management “compromised.” It apparently planned to give Green a majority of directors on a new board.