Harrisburg telegraph. [volume] (Harrisburg, Pa.) 1879-1948, 1916-02-17
ENDS NEGOTIATIONS
FOR PA. STEEL

FOk IA. SIEEL
GContinued From First Page.1
The Pennsylvania Company the Read
ing Iron Company and William H.
Bonner, president of Cambria Steel,
Will receive part cash and part bonds
in payment for the 76 per cent. of the
total stock they hold. The minority
shareholders will receive all cash.
To obtain all the stock. Mr.. Schwab
will pay approximately $25,000,OOO,
but he Will obtain plant he has long
desired as fitting unit to his Beth
lehem Steel Corporation. Last Octo-
Der he made several efforts to obtain
control, but Mr.. Donner stepped in and
exercised an option he held on 3S per
cent. of the stock in the hands of the
railroads.
Handsome Profit for Donner
Whether Donner was asked to with
draw from the field by the railroads or
decided to accept the offer made by
Schwab could not be learned yester-
day. The Cambria president will make
an excellent profit from the 3S per
cent. he possesses, as he paid SS4.71
for the preferred and 1920 for the
common. Only a week ago Mr.. DON
ner was enriched by at least 50, ,0OO, 900
by the sale of his Cambria Steel stock
TO the Midvale Steel and Ordnance
Company.
The fact that Schwab would obtain
Pennsylvania Steel does not come as a
surprise. The financial district has
heard persistent reports to that effect
for the past three or four days. After
the stock market closed yesterday the
PENNSYLVANIA Railroad representative
said that within the next few days,
probably to-day, the company would
make an official statement to the effect
that Mr.. Schwab had bought Pennsyl-
Vania Steel,
With the exception of Mr.. Schwab,
all those interested in the negotiations
in New York, where details were dis
cussed. Bankers are now arranging
the final steps to be taken by the SELL
ers and by Mr.. Schwab and If these
technicalities are settled to-day an an
nouncement of the sale will be made
Immediately.
Will Form Holding Company
To finance the purchase of the
Pennsylvania Steel Company, Schwab
will form new holding company. 1t
will he the bonds of this company he
will use in making part payment for
the stock held by the railroads. These
bonds will probably be short per
cent. The underlying bonds of Penn
sylvania Steel, 1T was said, would prove
no obstacle in the purchase of the
company. No doubt the present or
ganization of the various companies
controlled by Pennnsylvania Steel will
be continued.
Just what proportion of cash and
bonds the railroads and Donner will
receive could not be ascertained yes
terday, and later 1t was said that this
feature was one of the details taken
up at the conference. At first the rail-
roads were desirous of obtaining all
cash, but finally agreed to Mr.. Schwab's
proposition, although he modified it to
a certain extent.
Perhaps one of the most encourage
ing features of the deal from the
standpoint of the investor is the fact
that the minority shareholders, repre-
senting "a per cent of the stock, will
receive all cash for their holdings
While it is impossible to make a def
mite forecast at this time, many bank
ers are inclined to express the opinion
that some of the common stockholders
would refuse to accept $40 or even $50
q share.
Shares Advance Rapidly
Possibility of such "hold-out" was
forecast yesterday by the action of the
common stock in the local market.
The shares advanced to 90A. a gain of
more than 10 pionts from Tuesday and
an advance of ~ points from Monday.
are held by the public, while there
are about 100000 of the preferred
owned by outsiders. To obtain con-
troll Mr.. Schwab would not need the
outstanding common, but he is said to
be anxious to obtain every share, and
may yield to the outlaws"
Last fall, when Mr.. Schwab was
negotiating for the company, the COM
mon advanced to 100, the price many
persons now say they should obtain
for their stock. More than $4,000
shares of the preferred came out yes
terday, a record total for the shares.
They advanced more than So.
An official announcement of the deal
will probably come through President
Rea. of the Pennsylvania Railroad, al
though the details have been left to
Effingham b. Morris. a director, presi-
dent of the Girard Trust Company and
the Pennsylvania Railroad representa-
tive on the Pennsylvania Steel board
of directors, and to Henry Tatnall,
vice-president in charge of finance of
the Pennsylvania Railroad.
The Pennsylvania Steel Company
was incorporated in New Jersey, April
29. 1901, to acquire and hold the capi-
tai stock of the Pennsylvania Steel
Company of Pennsylvania, which was
itself successor on August 1, 1895, to
the property, rights and franchises of
q. COl VI Inc Sdillt IldIIlts Or
ganized in this State on March 23,
1866, with perpetual charter.
What Company Owns
The company owns plants at Steel |
ton and Lebanon, Pa, for the manu-
facture of steel rails railway material,
structural work and other products. |
Many factories. furnaces, foundries and
machine shops. are part of the plant |
The company also owns a 54-2 pes
cent. interest in the Cornwall ore
banks at Cornwall. Pa.
In addition the Pennsylvania Steel |
Company of New Jersey owns the en-
tire capital stock of the Maryland Steel |
Company, at Sparrows Point, Md; the |
Penn-Mary Coal Company, at He'll
wood. Pa; the Possum Glory Water
Company, at HOLLYWOOD; the Pine
Water Company, at He'll |
wood; the Spanish American Iron
in Cuba. The Pennsylvania !
Steel Company of Pennsylvania owns