Winner by a Knockout

When it became evident two years ago that Woolworth Heir Allan Kirby at 68 was losing the proxy fight for control of his Alleghany Corp., his ally Gene Tunney offered some ringside advice: "Sometimes, Allan, you have to get off the canvas to win."

Last week Kirby did that. Having worn down his onetime conquerors, he paid $10.5 million to buy 1,000,000 Alleghany shares and regain control. Two Kirby allies bought 600,000 additional shares, picked their opponents clean of Alleghany holdings. The sellers were the very men who had beaten Kirby in 1961: Dallas Millionaire John Murchison, 41, and his brother Clint Murchison Jr., 39.

Kirby now owns 43% of Allegheny's common (market value: $46 million), and his allies another 16%. By October, after special shareholder meetings that the SEC requires to approve transfers in command, he expects to be chairman once again of the Manhattan-based holding company that controls the New York Central Railroad and Minneapolis' investors Diversified Services, the nation's largest mutual-fund complex (assets: $4.2 billion).

Brick Wall. The Murchisons had not imagined there was so much fight in old Allan Kirby. With most of his $200 million fortune tied up in big blocks of blue chips, including Manufacturers-Hanover, I.T. & T. and Woolworth, they figured that Kirby would hardly risk more to battle back. But Kirby had a one-word explanation for his persistence: "pride."

The Murchisons in 1961 had won support of uncommitted Alleghany shareholders by promising to get stodgy Alleghany moving again. In control, they concentrated instead on trying to recapitalize Investors Diversified Services. Kirby frustrated the recapitalization plan in court, arguing that it would transfer direct and personal control of I.D.S. from Alleghany to the Murchisons, who are big I.D.S. investors.

Last December, muttering that he was "sick and tired of banging my head up against a brick wall," John Murchison sold 1,500,000 of the brothers' shares in Alleghany, plus an option on their remaining 1,900,000 to an ally, Minneapolis Financier Berlin Gamble, 65. Gamble took over as Alleghany president and tried to make peace. When Kirby still balked, Gamble backed out. He sold 1,000,000 of his shares to a Kirby ally, Murray Lincoln, president of Nationwide Insurance Co. Last week, acting as a go-between for the Murchison brothers, Gamble sold 1,600,000 more to Kirby and his associates.

The Beaten Brothers. Once he is back in command, Kirby hopes to put through a ten-to-one split of I.D.S. shares, which now market for $209 each, and list I.D.S. on the New York Stock Exchange. He also intends to press plans for a New York Central-Pennsylvania Railroad merger.

Last week Clint Murchison Jr. holed up on the brothers' private Bahaman island and took the radiophone off the hook; John flew off to Paris. Other Texas financiers, who had stomped their boots in joy when the brothers toppled an Eastern millionaire, were downhearted. More than glory had disappeared with the Murchisons' defeat. A decline in the price of Alleghany from a 1961 high of $15.50 per share to $10.63 at present, and their guarantees to make up any losses suffered by big proxy allies, had cost the Murchisons an estimated $18 million.

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