The conservative Maritimes financial community had not witnessed such tumultuous action since Lord Beaverbrook, Isaak Walton Killam and other legendary tycoons dominated the region’s business early in the century. In recent weeks, two powerful Atlantic business groups have squared off in an emotional battle for control of the Halifax-based Nova Scotia Savings & Loan Co. (NSS&L), an 1850s vintage firm with assets of $425 million. Already, the acrimonious affair has led to a series of lawsuits, and a number of people involved have been stunned by the bitterness that the dispute has generated.
The confrontation is personal as well as corporate. It pits H. Reuben Cohen, mystery moneyman from Moncton, and Montreal financier Leonard Ellen against two of Nova Scotia’s most prominent oldmoney families, the Sobeys and the Jodreys.
Cohen and the equally reclusive Ellen are the two challengers who launched the current bidding war. From modest beginnings they have rolled several old, independent Halifax trust companies into a conglomerate with $2.2 billion in assets. But in their latest endeavor they have run up against an alarmed Halifax establishment which has vowed to keep NSS&L in Nova Scotian hands. The result: a tense standoff as the two sides trade both tenders and insults. Donald Ripley, the vice-president of McLeod Young Weir Ltd., who is acting for Cohen and Ellen, charged that appeals to regional loyalties constitute “emotional distortion.” In reply, NSS&L President James Radford accused Ripley of being “notoriously imprecise” in his allegations.
The feud began with a 1968 takeover bid for NSS&L by Toronto-based Royal Trust. That failed attempt by an outsider caused serious concern in venerable old Halifax boardrooms and, in order to discourage a repetition, NSS&L’s board of directors wrote into the company charter a provision that no inter-
est or allied interest could vote more than 15 per cent of the shares.
But in 1981, NSS&L moved to lift the restriction, which would have allowed Halifax Development Holdings Ltd. to take control. HDHL is owned by the Jodreys, a family whose holdings began in lumber, and the Sobeys, a clan whose holding company, Empire Co. Ltd., has interests in 30 companies with $600 million in assets. When Cohen and Ellen heard that the 15-per-cent rule was to be dropped, they made their own grab for control. Then the Toronto Stock Exchange scuttled the HDHL deal, and the
15-per-cent rule remained in force. Still, Cohen and Ellen continued to accumulate company stock.
But the bitterness really began, insiders say, after a third suitor switched his allegiance. In April the small Halifaxbased Atlantic Trust Co. and its former president, Joseph Potter, despaired of gaining control of NSS&L and signed an agreement to sell a 14.9-per-cent block of shares to an agent of HDHL. Then Potter changed his mind and instead sold his holding in May to Ellen and Cohen. Exco Corp.—the firm owned by Ellen and Cohen—fired the first shot in the latest round on July 13 with a $21.50-a-share, $12-million offer for all outstanding common shares. It already had 49.5 per cent (compared to HDHL’s 14.9 per cent) but wanted enough shares to have the 15-per-cent voting rule struck down. The NSS&L directors re-
sponded by issuing 439,000 new shares that reduced the Exco holding to 35.7 per cent. New offers leapfrogged to $26 a share by late August, with share prices trading for as much as $33 on the Toronto Stock Exchange as investors anticipated even higher offers.
At the same time, the affair has spawned about a dozen court actions so far. Speculation is rampant over the motives of the protagonists. For his part, NSS&L President Radford claims that those motives have been based on business acumen. The company may not be worth $30 a share in the short run, he
said. But the development of East Coast oil and gas promises fast returns, and in the long run the offer is realistic, he argued. But David Hennigar, who is a nephew of Jodrey patriarch John Jodrey and is representing the family interests as regional director of Burns Fry, declared that old money loyalties are playing a role in the feud. “Nova Scotia is a small business community,” he said. “It does not have a lot of head offices. Central Trust is here today but it took over Crown Trust and it will not be long before its head office is moved to Toronto.” And one involved Halifax lawyer said that Cohen wants to settle scores with “an establishment that has rejected him.”
There is no prospect that the battle will end soon. But even if it should, the wounds in the small community will take a long time to heal.
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