PITTSBURGH, JULY 25 -- Bethesda dealmaker Melvyn J. Estrin yesterday won an underdog campaign to wrest control of National Intergroup Inc. from its chairman, Howard M. "Pete" Love, persuading shareholders to oust Love and two allies from the board of a one-time steelmaking giant.
In their place, an unexpectedly powerful amalgam of unhappy institutional investors and individual shareholders elected Estrin and two associates, William G. Tull of Potomac, former president of American Security Bank, and Robert J. Slater of New York, former president of Crane Co., a building products firm.
Estrin and his partner, Abbey J. Butler of New York, had waged a very public campaign for shareholder support, attacking Love's management of NII and arguing that the company should be broken up and sold.
Love's loss of his board seat will thus bring to an end his 10-year reign as chairman of the NII board, in which he moved the company out of its longtime position as a top steelmaker and into pharmaceuticals and other diversified businesses.
When Love gives up his board seat at the board reorganization meeting on Aug. 22, he also will have to step down from his position as board chairman. Although he will still be NII's chief executive officer, Love said recently that after 25 years with NII, he would retire by March 31, 1991.
Love would not say yesterday whether he would quit as CEO sooner than planned. And Estrin would not comment on whether he would seek to push Love out.
"Nobody likes to lose," was Love's only comment on his defeat.
Estrin's victory highlighted a new trend in the corporate takeover business, one that has emerged since the slowing U.S. economy has made it difficult for companies to take on the heavy debts that had been used to finance takeover and buyout activity in the 1980s. Rather than trying to purchase a controlling block of NII stock, Estrin chose the slower, less costly but chancier strategy of fighting for control of the NII board -- a tactic that is likely to see wider use in the future, according to market analysts.
Estrin and Butler, through Centaur Partners IV, bought only 16.5 percent of NII's stock, but it was enough to give them a platform from which they could launch their effort to take over the company by gaining a major presence on the board.
While Estrin will control only three seats on the 10-member board, Estrin said that the lopsided victory, combined with Love's personal defeat, will give the Centaur candidates considerable clout in deciding NII's future.
Love and NII already have committed themselves to breaking up the company and keeping only the $2.7 billion-a-year FoxMeyer Corp. wholesale pharmaceutical division.
In fact, stockholders were asked yesterday to approve a plan to change the name of the corporation from National Intergroup to FoxMeyer Corp. It was not immediately determined whether or not the name change was approved.
While official vote tallies will not be available until Aug. 9, the outcome in the hard-fought contest over director's seats was so clear that Love admitted after the annual shareholders meeting that his side had lost. Estrin and Butler said they had won an "overwhelming victory."
Yesterday's victory was Estrin's first major score on the national dealmaking stage. He had previously taken a run at Pennwalt Corp. of Philadelphia, but his efforts were rebuffed when Pennwalt was sold to a French chemical company.
Estrin, 46, got his start in Washington business in 1965, when fresh out of college, he and a friend opened a Pennsylvania Avenue discotheque called the Tomfoolery. It was a success and Estrin later moved into investments in hospital and nursing home management and job training services, all of which helped turn Estrin in a multimillionaire.