If L. Gordon Croft were having his portrait painted this week, he might be portrayed in the robes of a Roman senator poised to give the thumbs-up, thumbs-down signal of life or death for a gladiator in the Colosseum.
For that is the power that Croft and a relative handful of other investment managers have over the future of National Intergroup Inc., the former steel giant that is locked in an intense, elbow-swinging merger battle that will be decided Thursday.
Croft is president of the $309 million-asset T. Rowe Price Growth & Income Fund, which has full or shared control over more than 8 percent of National's outstanding shares, according to National. He and other large institutional investors, who together control perhaps 60 percent of National's stock, are the focal point of the merger fight.
From National's perspective, the company is attempting to complete an Odyssean voyage through the turmoil of the 1980s that has battered so many other U.S. manufacturing companies.
National has spent the past half-dozen years trying to transform itself into a diversified conglomerate, blending its remaining steel-making investments with more promising services businesses. The merger would combine National with Bergen Brunswig Corp., a distributor of drugs, health care and consumer electronics products, and medical and surgical supplies.
As National Chairman Howard M. Love puts it, the merger offers the best available opportunity for National to prosper by sharing its ample supply of cash from earlier sales of unwanted operations and its equally ample tax deductions with Bergen Brunswig, a high-growth, high-tax-bracket company that needs both cash and deductions.
But the marriage is fiercely opposed by a group of professional investors who contend that the deal shortchanges holders of National common stock, who stand to receive 1.225 shares of Bergen Brunswig for each share of National, or $639 million, based on Bergen Brunswig's closing price Friday on the American Stock Exchange.
The opponent, Leucadia National Corp., says National would be worth more if auctioned, either whole, or in pieces.
But if the merger goes through on Thursday, there won't be a chance to find out what National is worth, according to Stephen Jacobs of the law firm Weil, Gotshal and Manges, an attorney representing Leucadia. That's because the merger agreement would leave effective control over election of directors in the hands of the two principals of Bergen Brunswig, Chairman Emil P. Martini Jr. and President Robert E. Martini.
"Ask yourself whether you want to give the Martinis irrevocable control over National Intergroup and its over $1.5 billion of assets," said the Leucadia-sponsored full-page newspaper ad on Friday.
The Martinis now control Bergen Brunswig through their ownership of the tightly held Class B stock in the company. Love and National President James E. Haas also would become Class B stockholders under the merger agreement.
That has prompted Leucadia to charge that the big winners in the deal will be Love and Haas, each of whose Class B stock is worth $2.2 million, according to Leucadia. In addition, upon their deaths, the Class B stock of the two National executives would be purchased by the company at a premium over market price -- the "golden casket" arrangement, Leucadia calls it -- worth $10 million apiece to their families, Leucadia contends.
In an interview, Love called the accusations "grandstanding."
"We couldn't make the deal without including the B stock. They the Martinis wouldn't give that up," Love said. He asserted that he and Haas agreed to become Class B shareholders "so that it could be a merger of equals."
As to Leucadia's complaint that the arrangement is a windfall, Love said that he would give up long-term benefits from National worth at least that much if the merger is approved. "I explained it to my wife," he said. "She thought it was a lousy deal. . . . She has a point.
"It's typical grandstanding -- an attempt to take people's eyes off the main issue," Love said.
(While parrying these jabs, National has thrown a few of its own, advising shareholders to take a close look at the Leucadia proxy statement. In its final pages, the statement mentions a $4.5 million jury verdict last year against Leucadia Chairman Ian M. Cumming of Salt Lake City in a civil suit that alleged a violation of fiduciary duties. After the jury verdict, the dispute was settled with a $4.5 million payment to the plaintiffs.)
The central issue is not the elbowing, but the question of what National Intergroup is really worth.
Leucadia has contended in its publicity campaign that the main pieces of National -- National Steel and First Nationwide Financial Corp. -- plus its cash and other assets, are worth between $50 and $55 a share -- not the $31-plus that is now in sight under the merger agreement.
Some Wall Street analysts such as Peter F. Marcus of Paine Webber Inc. have valued National Intergroup at about $36 a share before the merger, but analysts say it is far from a simple calculation.
National last year sold a one-half interest in its steel-making operations for $273 million in cash and a $19 million note to Nippon Kokan K.K., a leading Japanese steel maker that had been anxious to get a piece of an American steel company.
According to Leucadia, National's remaining one-half share ought to be worth $268 million, or $13.26 a share.
But if the merger were blocked and an attempt made to sell National's one-half share on the market, NKK could demand that National repurchase its half of the business for at least $341 million -- a minimum profit of $68 million for NKK.
National's shareholders have to guess what would happen to the steel operations -- a key piece of National's balance sheet -- if the merger were blocked.
"I don't think anybody wants half a steel company," Love said. NKK wouldn't be a buyer, he maintained. "They have no interest in enlarging their position or in taking over the whole thing."
"The point is, they're trying to say we're being taken over," Love said. "This is a merger in the most absolute sense. . . . If somebody had acquired us, they should have paid a premium." "But you don't get a premium on mergers."
It is a difficult merger to explain to shareholders, as Love acknowledged. "We're a very complicated company, with a savings and loan, steel, aluminum. Then we're trying to merge it into a pharmaceutical business. It's not easy to explain," he said.
Love said he has personally explained the merger to the managers of two dozen financial institutions, most of whom have been very supportive.
But he must cope with a contrary mood among some Wall Street investors and speculators, particularly in this heavy period of takeovers and corporate raids.
To these players, National's potential short-range value in a bidding contest is at least as important as the long-range synergy between National and Bergen Brunswig and the growth prospects that Love speaks about.
"If the merger goes through, this company is locked up," out of the grasp of investors and speculators, a Wall Street analyst said.
"Our problem is, Mr. Love says if he could have gotten more for the company , he would have," said Jacobs, Leucadia's representative. "Then they say National's management hasn't entertained any other offers."
Leucadia says it has no present intention of attempting to acquire National if the merger is rejected. But the company thinks someone might, Jacobs said. "If the merger fails, we would try to pressure National's board to sell its businesses in an orderly fashion or to actively seek offers for the company in its entirety," he said.
Leucadia has been joined by T. Rowe Price's Croft, who reportedly bought National Intergroup stock when the price was above $30 and who does not like the merger.
Not long ago, Love had a two-hour face-to-face meeting with Croft."It was very difficult," Love recalled. "You talk and talk. He sits and listens. I made my case, but apparently I didn't make the sale."
The rest of the votes will be tallied on Thursday.