National Intergroup Inc., one of Pittsburgh's steelmaking giants only a decade ago, yesterday agreed to break itself up under pressure from an upstart group of Washington and New York investors who argued that the sum of the company's parts is worth more to shareholders than the whole.

Before its name change in 1983, it was National Steel Corp., the nation's seventh-largest steel producer and a leading supplier to Detroit's automobile industry. Mirroring the retreat of U.S. basic industry in the 1980s, National Intergroup Inc. (NII) was remade into a diversified conglomerate with retailing, distribution and other businesses.

Under the new NII plan, the company will be renamed the FoxMeyer Corp., after its surviving wholesale drug subsidiary. NII will close its Pittsburgh office, which now has about 55 employees, and the headquarters will be moved to Dallas, where FoxMeyer is located.

The final chapter of NII's demise is largely credited to Bethesda dealmaker Melvyn J. Estrin and his associates in Centaur Partners IV, investors who bought shares in NII beginning in January, hoping that a breakup of the company would lead to lucrative payments to stockholders.

It has been a David-and-Goliath triumph for Estrin, the son of a prominent Washington businessman who headed District Wholesale Drug.

In 1965, Estrin, fresh out of college, opened a Pennsylvania Avenue discotheque called Tomfoolery with a partner -- his opening business venture. A series of investments followed, in hospital and nursing home management and job training services, among others, turning Estrin into a multimillionaire.

By this January, Estrin and his associates were ready for a run at NII. Their tactic -- an attempt to gain control over the company by winning seats on the board of directors in a shareholder election -- has become the primary form of corporate warfare, following the eclipse of hostile takeovers this year.

In 1980, the Pittsburgh company, under chairman Howard M. "Pete" Love, had begun a long exit from the steel and metals competition. With steel imports rising steadily, the market was too tough for National, Love concluded.

A steel plant in Weirton, W.Va., was spun off to its employees and 50 percent of the remaining operations were sold to one of Japan's leading steelmakers, Nippon Kokan K.K. The Japanese company recently increased its stake to 70 percent. National Steel Corp., which now has a Japanese president, is the sixth-biggest U.S. steel producer today.

NII said yesterday that its remaining investment in the steel business will be held by FoxMeyer. Love said that he planned to step down when NII's breakup is completed, which he said should be no later than March 31, 1991. Love, who has come under heavy fire from stockholder critics for his management actions, said he had no specific plans after his departure.

Estrin, through Centaur Partners IV, owns 16.5 percent of the stock of National Intergroup. Centaur has been preparing to run its own candidates for several seats on NII's board of directors. The exact number is an issue before the Court of Appeals of Delaware, the state where NII is chartered.

Calling the NII breakup plan "a step in the right direction" Estrin said, "we await the substance of the board's program." He added, "We are pleased that the accountability we have demanded has brought this action." He said he did not yet know how much shareholders would get from the breakup.

NII shares recently traded in the $13 to $15 range although Centaur's investment bankers contended that the company was worth $29.34 a share. After a trading halt yesterday, the stock closed at $17.38, up $2.50.

NII said yesterday that the surviving company will be run by Robert L. King, 40, president of FoxMeyer. Calling King and his aides "fully qualified" to run FoxMeyer, Love said he believed, "The best thing I could do is to stay the hell out of their way and let them run the company."

NII's new plan includes:

Selling its 1,300 Ben Franklin stores, which sell craft products and general merchandise. Ben Franklin stores recorded sales of $341 million last year.

Completing a tender offer for the preference units of Permian Partners L.P., a distributor of crude oil. NII is offering $3.75 each for the units. Once they are bought back, NII will attempt to dispose of the company through a sale, spinoff or the formation of a joint venture.

Paying a special per-share dividend to stockholders or a buyback of stock, using the cash generated by the sales of several divisions.

As for the forthcoming shareholder fight, scheduled for the annual meeting on July 25, Love said, "The only point where we and Centaur part company is the question of whether to sell FoxMeyer now. We believe FoxMeyer will be worth far more in the future than what we could sell it for now. In fact, we think this is the worst time to sell FoxMeyer."

FoxMeyer sales last year were $2.4 billion.

Estrin replied yesterday, "We are not saying it should be sold this minute ... but sooner is better than later."