Shumway Built Signal Into High-Tech Giant

Signal Cos., founded in 1928 as Signal Oil & Gas Co., shrewdly rode an acquisitions-and-divestiture wave to turn itself into a premier diversified high-tech manufacturer with $6 billion in annual sales.

Analysts credit the transformation to Forrest N. Shumway, the athletic 57-year-old chairman and chief executive who joined Signal in 1957 when an uncle, who founded the company, persuaded him to leave the Los Angeles County counsel’s office and become Signal’s legal counsel. The relatively sleepy energy company was never to be the same.

In 1964, with a 37-year-old Shumway as president, Signal used $80 million of its convertible preferred stock to rescue Garrett Corp., a Los Angeles-based jet-engine and spare parts firm, from Curtiss-Wright Corp.’s unwanted takeover bid.

In 1967, Shumway again played the white knight, this time with a timely $82-million bid that thwarted Cleveland-based White Consolidated Industries’ planned takeover of Mack Trucks.

Signal entered the broadcasting and sports arenas in 1968, buying a 49.9% stake in Golden West Broadcasters, the owner of Los Angeles television station KTLA and the California Angels baseball team.

In 1968, Signal changed its name to Signal Cos. Inc., and, in 1974, it left its oil and gas heritage behind when Shumway sold those operations to Burmah Oil for $480 million. He later explained: “It takes huge amounts of capital, literally billions of dollars, to sit in the oil game. There is no place for a medium-size company like we were.”

But in 1975 he returned, spending $123 million for a 50.5% controlling interest in UOP, an oil industry technology manufacturer with $700 million in annual sales. Signal bought the rest of UOP in 1978.

When Signal moved from Beverly Hills to its new corporate offices in La Jolla in 1980, Shumway made community involvement a high corporate priority. Signal became a leader on the philanthropic scene. Shumway said Wednesday that the merger with Allied Corp. will “have little if any effect” on that community involvement.

In 1981, Signal merged with Ampex Corp., bringing the audio, visual and computer-tape company into the fold as a wholly owned subsidiary. In 1983, it merged with Wheelabrator-Frye Inc., bringing that engineering company’s chairman and founder, Michael D. Dingman, into the company. Dingman is now Signal’s president and will be president of the merged Allied Signal.

During 1983, Signal continued its program of divestiture, usually coming away with more than it had invested. When Signal sold most of its Mack Truck holdings, it doubled its original investment. It made 16 times its original investment in a Diamond Shamrock subsidiary and won a nearly tenfold return on Golden West Broadcasters.

Although criticized at the time they were made, Signal’s acquisitions are today viewed as healthy operations by analysts. Garrett, which is doing well in its core defense-related business, is also believed to control 75% of the rapidly expanding automotive turbocharger business.

Ampex, hurt in recent years by overseas competition, withdrew from the consumer tape market and is now an industry leader in the professional market.

Signal’s engineering and construction division, which suffered several flat years, is considered to be healthy. Signal is also a major force in the trash-to-energy systems industry.