With Their Own Money

As a merger magician, Meshulam Riklis, 44, fits into a niche all his own. Starting in Minneapolis as a $50-a-week securities analyst, he stitched together a conglomerate composed of retailing, clothing, textile and theater companies with $1.4 billion a year in sales. Overextended and debt-laden, Riklis' empire almost collapsed five years ago. He rallied by selling off a big chunk of his complex to raise funds. Last week he climaxed his comeback by capturing his richest corporate prize yet: Schenley Industries, Inc.

Enough Schenley stockholders accepted a tender offer to give Riklis' Glen Alden Corp. 88% control of the big distiller (1967 sales: $518 million). Fat with $323 million in working capital, Schenley was a tempting merger plum. As befits Riklis' guiding philosophy--described as the art of buying companies with their own money--Glen Alden is paying for Schenley mostly with promissory paper. For each H Schenley shares, worth about $85 in the stock market, Schenley stockholders get $13 in cash; they also get a $100 debenture that pays 6% annual interest until its 1988 maturity. Riklis can thus tap 20 years of Schenley earnings to repay most of the purchase price. Inevitably, some Schenley executives objected to Riklis' terms as a thinly camouflaged raid on Schenley's treasury. Of such people, Riklis snapped: "They are just afraid they will be fired."

Whatever management changes may be ahead, the acquisition apparently ends the career of Schenley's eccentric founder and chairman, Lewis S. Rosenstiel, 76. Before making his tender offer for the balance of Schenley stock, Riklis persuaded Rosenstiel to sell his own 18% controlling interest for $75 million in cash. Riklis also personally bought Rosenstiel's six-story Manhattan town house for $350,000. "Mr. Rosenstiel," said Riklis last week, "has indicated his desire to retire."

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