Utilities: Marriage Inside the Family

All kinds of situations impel companies to merge — too much or too little cash, a shortage or a surfeit of able executives, tax advantages or growth-manship. Last week two large but little-known conglomerates agreed to unite for an equally compelling reason: they were practically married anyway. Toronto-based International Utilities Corp.

and Philadelphia’s General Waterworks Corp. have in common not only the same chairman, Stockbroker Howard Butcher III, but also the same president and chief executive, Chemical Engineer John M. Seabrook. The trouble with that sort of alliance, says Butcher, is that “It’s almost impossible for one management to run two parallel companies. In acquisitions, for example, how can you tell which way to go?”

Like Opium. Butcher, 65, and Seabrook, 50, have been resolving the dilemma with finesse and foresight; they have snapped up some 20 other companies since 1959. The diversification began, says Seabrook, “because feeding your shareholders dividends is like feeding them opium. You have to keep giving larger doses. We didn’t think we could face withdrawal symptoms.” Accordingly, from gas and electricity production in the Canadian province of Alberta, International Utilities spread into ocean shipping, bus lines, demolition and salvage, steel fabrication, trucking and copper-silver mining.Revenues rose from $38 million in 1959 to $189.5 million last year; profits more than doubled to $15.7 million.

By similar branching out, General Waterworks, which provides water, sewer service and steam heat through 89 subsidiaries in 17 states, lifted its revenues ninefold to $249 million and increased profits sevenfold to $16.7 million. Today the company also makes irrigation equipment, computer and aircraft parts, clay and concrete pipe, water heaters, industrial valves and refrigeration machinery; it produces milk products, sells insurance, answers telephones for 68,000 subscribers.

The marriage inside the family, subject to the anticipated blessing of stockholders, will make surviving International Utilities a major combine: $800 million assets, $480 million annual revenues, 35,000 employees in 40 U.S. states, six Canadian provinces and twelve foreign countries. Says Seabrook: “It gets us into the big time.”

Feathered Engines. By any measure, Butcher and Seabrook already rank as big-time executives. A director of 26 companies, Butcher controls the largest ‘single block of stock in the Pennsylvania Railroad, plus enough shares in the New York Central so that he would still control one of the largest holdings when the two lines merge. As senior partner of Philadelphia’s Butcher & Sherrerd, he supervises $500 million in investments for some 400 clients.

Butcher’s financial talent dovetails with Seabrook’s knack for curing sick companies. A Phi Beta Kappa graduate (’39) of Princeton, Seabrook first rescued his own family company, Seabrook Farms, from a disastrous slump. In 1959, when his father, now dead, sold control of the frozen-food firm, Seabrook quit as president and joined Butcher. He became president of I.U. in 1965, and of General Waterworks last year. Often his doctoring of acquisitions involves nothing more startling than sending in a financial expert to bail out a sales-minded boss. “A lot of companies are mismanaged by the president because he lacks a good information system,” says he. “Then if something goes wrong, he feathers the wrong engine.”

For all their drive, Butcher and Seabrook operate in relaxed fashion, Butcher from his ground-floor brokerage desk, Seabrook from a pint-size office eight floors above. Butcher still swims daily in his suburban pool, plays tennis regularly. Seabrook, a model-railroad buff, raises horses and collects antique carriages (he has two dozen) at his 4,200 acre farm in Salem, N.J. He and his wife, former United Press Correspondent Liz Toomey (whom he met at Grace Kelly’s wedding to Monaco’s Prince Rainier), often slip into 18th century costume for champagne-sipping country outings amid the asparagus and spinach; in winter they like to take guests across the fields for picnic dinners in the snowy woods.

Once a New Jersey park official halted Seabrook’s entourage for imbibing aboard a carriage. The state’s attorney general, who happened to be one of the guests, quickly resolved the situation. He ruled that state laws against drinking while driving do not apply to horse-drawn vehicles.