Monday 23 October 2017

Legendary financier who took a $58m bite out of Disney

Saul Steinberg, who has died aged 73, became one of America's most feared stock market players having perfected the art of "greenmailing", in which the companies he targeted for takeover paid him many millions of dollars to desist.

Steinberg first came into the public eye in the late 1960s, when Forbes magazine named him America's richest self-made man under 30 – and he launched an audacious corporate raid on Chemical Bank, then the sixth-largest US commercial bank.

He adopted the code name "Faye", after the actress Faye Dunaway, for Chemical, and "Raquel" (Welch) for his own master company, Reliance.

The bid met hostile reactions from the likes of New York's governor Nelson Rockefeller and the Federal Reserve chairman William McChesney Martin, as well as from the bank itself, and failed.

But a pattern was established in which Steinberg would acquire a share stake, demand a seat on the "target" company's board, hold forth about his plans to transform its business, then continue buying smaller numbers of shares until a premium offer was forthcoming for his holding in order to persuade him to go away.

His most celebrated use of this technique, backed by Wall Street's "junk-bond king" Michael Milken, was a bid for Walt Disney Productions in 1984, from which he extracted $58m of profit.

Other greenmail targets included the Penn Central railroad company, while Reliance, which was principally an insurance business, collected a ragbag of interests ranging from Days Inn budget hotels to a telecoms venture in Spain – and provided a fountain of dividends to fund Steinberg's billionaire lifestyle.

Plump, ebullient and fast-talking, Steinberg once told an interviewer: "You watch: like the Rockefellers, I'll own the world – I might even be the first Jewish president."

He acquired an estate in the Hamptons on Long Island and a 34-room apartment in Manhattan that had once belonged to John D Rockefeller.

His taste in art evolved from Picasso and Francis Bacon in earlier years to Titian and Rubens in his 1980s heyday; the latter's 'Death of Adonis' graced his Park Avenue drawing room, while a Renoir was allegedly consigned to the bathroom.

For his 50th birthday party in 1989, live models recreated scenes from his favourite Old Masters. He and his third wife, Gayfryd, were fixtures of New York's charity gala fund-raising scene, while a roll-call of politicians benefited from his campaign donations.

But Steinberg's fortunes went into decline after he suffered a stroke in 1995. He fired his brother Robert, his long-time business partner, and the increasingly debt-laden Reliance came under scrutiny from insurance regulators as its reserves evaporated.

Steinberg was obliged to sell both the apartment – for a record $37m, to the private-equity tycoon Stephen Schwarzman – and the art collection, for $50m at auction, when the company was forced into bankruptcy in 2001.

Saul Philip Steinberg was born in Brooklyn on August 13, 1939, the son of a manufacturer of rubber bath mats.

He graduated from the University of Pennsylvania's Wharton Business School, of which he was later chairman of the board of trustees and a $30m benefactor. Steinberg began his working life running subway station news stands but, in 1961, borrowed $25,000 from his father to launch a venture leasing IBM computers at cheaper rates than were offered by the manufacturer itself.

It swiftly made him his first millions; having taken it public in 1965, he used its shares in 1968 in a complex deal that brought him control of the 10-times-larger Reliance, an long-established and cash-rich Philadelphia insurer that became his base of operations for the rest of his career.

Steinberg is survived by two sons and a daughter from his first marriage, to Barbara Herzog; a son of his second marriage to Laura Sconnocchia; and by his third wife, Gayfryd McNabb, whom he married in 1983, and their son and daughter.

His mother, Anne Steinberg, who once sued him over an unpaid $6m debt, died on the same day as her son.

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