Loft Lift

Jut-jawed Charles G. Guth became a vice president of Loft, Inc. in 1929, immediately began gunning for control of the $13,000,000 candy-&-restaurant chain. At the 1930 stockholders' meeting, a police cordon was needed to keep the scrap verbal. That year Charles Guth collected enough proxies to make himself president. In 1935, embattled President Guth resigned. Instead of ending, the Guth-Loft squabble thereupon entered a new and noisier phase.

Shortly after he joined Loft, Mr. Guth bought control of Pepsi-Cola Co., manufacturers of a dark, sweet soft drink which was then just another of the 1,000-odd aspirants to Coca-Cola's crown. By energetic promotion, including putting Pepsi-Cola instead of Coca-Cola in the fountains of Loft's 200 stores, Pepsi-Cola was fizzed up to the point where it became a respectable competitor of Coca-Cola.*

Contending that ex-President Guth had used Loft assets, facilities, personnel and credit to build up Pepsi-Cola, Loft brought suit for the 237,500 shares (91%) of Pepsi-Cola stock held by Mr. Guth and his family holding company, Grace Co. When Delaware's Court of Chancery last year agreed with Loft, Pepsi-Cola was selling at $70 a share (it is now $130). Pepsi-Cola profits were $2,700,000 in the first nine months of 1938; Loft lost $867,000 in the same period.

Loft stock, which had been selling at 75-c- in March 1938, zoomed to $9 on the court decision, has since been one of the market's liveliest issues. Last week the Delaware Supreme Court turned down Mr. Guth's appeal. That day Loft was the most active issue on the New York Stock Exchange, with sales of 87,600 shares, closed at $9.75.

A mighty" lift to Loft, the decision not only handed it Pepsi-Cola but ordered Mr. Guth to turn over back dividends of some $475,000. Mr. Guth was reported interested in a new dark, sweet soft drink. Name: Noxie-Kola.

*Last week Coca-Cola reported 1938 net profit of $25,000,000.

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