CORPORATIONS: Repeat Performance

When Edward O. Boshell, 51, became president of Westinghouse Air Brake two years ago, he found the till full of cash. There was more than $25 million in “excess working capital” on which the company was earning virtually nothing. Boshell decided to spend it to “expand and diversify the company’s business as quickly as possible.” In short order, he bought: ¶Virginia’s Melpar,Inc. (industrial research).

¶ Milwaukee’s Le Roi Co. (portable air compressors and internal-combustion engines for the oil industry).

¶Famed old George E. Failing Supply Co. (world’s largest producer of portable rigs for oil exploration).

The purchases used up most of the cash, but Boshell was not through expanding.

Last week, with money borrowed from Pittsburgh’s Mellon National Bank & Trust Co. and others, he made his biggest buy of all: 60% of the plant assets of Peoria’s R. G. LeTourneau Inc. for $26 to $30 million (depending on the value of inventories). What Boshell got was that part of the company which is engaged in making its famed earth-moving equipment.

Rumors of the deal set off some giddy speculating in LeTourneau stock. Selling for only 20¢ earlier this year, it hit 43 last week. The big puzzle was how much LeTourneau* would pay per share to buy up the 186,000 shares of common stock held by the public. Wall Street calculated that after the preferred stock, debts and taxes were paid off, there would be a net from the sale of $17.5 million. On that basis, each of the 503,370 LeTourneau shares is worth about $35 in cash from the sale, plus the value of unsold assets in the part of the company LeTourneau retains. LeTourneau himself has no intention of retiring. He plans to go into new manufacturing ventures, which include a trackless, rubber-tired “Tournatrain,” for use in deserts and jungles.

To Boshell, who unscrambled one of the biggest omelets in utility history as liquidator of Standard Gas & Electric (TIME, Nov. 17), putting together LeTourneau’s earth-moving business and Westinghouse’s railroad equipment made plenty of sense. Like his other buys, LeTourneau’s earth movers dovetail nicely with Westinghouse equipment. By purchasing LeTourneau’s major assets, instead of its stock, Boshell also increased his depreciation base by $18 million, will thus be able to write off half of it against taxes within ten years.

* Who, under “a deal with God,” turned over 63% of his company’s stock and 90% of his personal earnings to the LeTourneau religious foundation (TIME, July 28). Thus the religious foundation will get the major portion of the sale price.