Steinberg Seeks OK to Buy More Than 15% of UAL Corp.

A company controlled by New York corporate raider Saul P. Steinberg sought government permission on Wednesday to buy more than 15% of UAL Corp. shares, a move that could spark another round of takeover turmoil for the parent of United Airlines.

Steinberg, a veteran of takeover battles for Walt Disney Co. and Penn Central Corp., had no comment on why his Reliance Group Holdings wants to accumulate UAL shares. UAL also had no comment.

Analysts familiar with UAL were uncertain of Steinberg’s motives. Many doubted that Steinberg, a close friend of UAL Chairman Stephen M. Wolf, would make a hostile move against the company.

Edward J. Starkman, an analyst with Paine Webber in New York, speculated that Steinberg had joined with Wolf in a new effort to acquire UAL. Last month, Wolf tried to buy the company with United’s pilots and top managers, but lenders refused to finance the historic $6.75-billion bid.

Starkman said Steinberg and Wolf might “find a new way to get it done,” and said an alliance between the two men “was not out of the question.”

Arbitragers, or professional stock speculators, have expected a new bidder to emerge for UAL. It is believed that Coniston Partners, a New York investment firm, owns a large block of UAL shares and may be preparing a bid.

Another possible buyer is Los Angeles investor Marvin Davis, who is seeking union support for a new offer for UAL. United’s machinists union has said it won’t support Davis, who started UAL’s takeover activity last August with a $240-a-share bid.

A source familiar with the situation said Steinberg doesn’t own any UAL shares. The New York investor had owned 6.9% of UAL’s stock, but sold his holdings after the takeover battle drove UAL’s stock price as high as $294.

UAL’s shares have skidded since the Wolf group’s bid fell apart. UAL stock closed Wednesday at $177 per share, up $1.50, on the New York Stock Exchange. Word of Steinberg’s interest came after the market close.

Several analysts said that Steinberg might simply want to buy UAL shares as an investment. A takeover move from either Davis or Coniston would likely push UAL’s stock price higher, handing Steinberg a profit.

“He might believe the stock has room to go up and wants to invest in it,” said Robert Decker, an analyst with Duff & Phelps in Chicago.

It is also possible that Steinberg wants to make the investment to guard UAL from an unwanted takeover.

Others said it would be difficult for Steinberg, or any other investor, to buy UAL because its pilots would resist any transaction that doesn’t give it a majority stake in the airline. The bid by the Wolf group would have given employees a 75% stake, and management 10%. “They were a hair’s breadth from owning the airline,” said one analyst who asked not to be identified. “They are adamant about having control.”

This analyst said Steinberg isn’t likely to mount a full-blown takeover bid and take a minority interest. “His pattern has always been either he acquires control and takes the company private, or he takes a passive interest with no intention of buying the company.”

For example, the analyst said, Steinberg owned 16.5% of Los Angeles-based Tiger International until it was sold to Federal Express last December. Wolf was chairman of that Southland air cargo carrier before he joined United.

Steinberg is no stranger to takeover activity. In July, his Reliance Group Holdings agreed to pay $20.8 million to settle a “greenmail” lawsuit that arose from his raid on the Walt Disney Co. in 1984. The suit claimed Disney unfairly paid Steinberg greenmail, or an above-market price, for his Disney stock to persuade Steinberg not buy the entertainment company.

Steinberg’s request for permission to buy more than 15% of UAL came in a filing with the Federal Trade Commission and the Justice Department.