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American businessman

Victor Posner (September 18, 1918 – February 11, 2002) was an American businessman. He was one of the highest paid business executives of his generation. He was a pioneer of the leveraged buyout and became notorious for asset stripping.

Of Russian Jewish descent, he was born in Baltimore, Maryland, one of nine children of grocers Morris and Mary Posner. Though he left school at age 13, he claimed to have earned his first million dollars by the age of 21 by investing in real estate, although financial records do not confirm this. Taking advantage of the post World War II demand for housing in America, in 1948, he developed land and built houses in the Baltimore area, and by 1952, was building more than 1,100 dwellings per year. In 1954, he moved to Miami Beach, Florida, where he continued to invest in real estate and publicly traded companies. He became the head of numerous companies over his career, including Security Management Corporation (owner of rental property in Maryland and Florida), DWG Corporation (Arby's and Royal Crown), NVF Company, Sharon Steel Corporation, Pennsylvania Engineering Corporation, Salem Corporation, APL Corporation, Evans Products, Graniteville, and Southeastern Public Service Company. Posner's primary vehicle was the Deisel Wemmer Co., a cigar manufacturer and importer based in Ohio, which was founded in 1884. By January 23, 1929, Deisel Wemmer incorporated as Deisel Wemmer Gilbert Corporation (DWG) when acquired by an investment group. DWG was a small outfit and just to keep up market share purchased other small cigar companies like Odin cigars in 1930 and the Bernard Schwartz Cigar Corporation in 1939. The Company on May 15, 1946, changed its name to a simple name, DWG Cigar Corporation. Another series of acquisitions started in 1948 with the Nathan Elson Company following with A. Sensenbrenner & Sons in 1955 and in 1956 Chicago Motor Club Cigar and Reading, Pennsylvania based Yocum Brothers. With the weakening of the cigar market due to medical advisories, many smokers switch to cigarettes, which were then believed to be safer. DWG then streamlined cigar operations and began looking for other businesses that might suit DWG's wholesale and distribution strength. The New York Stock Exchange delisted DWG in 1965, the company then sold their remaining cigar operations or closed them in 1966. Renamed as DWG Corporation, DWG used its cash from the cigar operation sale to purchase a 12% share of the National Propane Corporation. Security Management Company, headed by Victor Posner, a major investor in DWG saw potential with the company as it was bold to sell its main operation. Posner saw it as a good takeover vehicle and became the controlling interest of DWG. Acquisition Industry Year Stake National Propane Corporation gas 1966 12% share Wilson Brothers shirtmaker January 1967 controlling interest National Propane Corporation gas 1967 77% Southeastern Public Service Company medium size utility maintenance and storage company 1969 40% Southeastern Public Service Company medium size utility maintenance and storage company 1970 11% Graniteville Company textile manufacturer 1982 51%+ Axia Incorporated 1984 25% Evans Products fiber group 1984 Fischbach Corp. electrical contracting 1985

An investor that Posner contacted to help get Sharon Steel out of bankruptcy, indicated that his lawyer, Andrew Heine, might want to buy Fischbach Corp. Just short of Fischbach being sold, Heine's Granada Investments Company made a bid for all of DWG at $22 per share. Posner converted all DWG options into voting shares but was unable to vote them due to an Ohio judge's order. Granada sued Posner for not taking the bid seriously and Posner sued back stating the bid had no merit. Posner lost the case in 1991 and was forced to pay $5.5 million to Granada. Furthermore, the judge noting other investigations in illegal stock trading in the Fischbach acquisition and of Posner's compensation added three court appointed directors to DWG's board as audit, compensation, and intercorporate transactions committees. Cable Car Beverage Corporation, maker of Stewart's Root Beer and other flavors, was purchased by Triarc in November 1997. National Propane Corporation was sold in 1999.

He was said by Forbes magazine to "have the arrogance of a banana republic dictator" and by the New York Times to be the "dean of the corporate takeover". The Economist said, after he died, "he was a pioneer of the hostile takeover of a public company. He was dismissive of the convention previously observed that a takeover should have the agreement of the existing board. He would spot a company whose assets he judged were undervalued, gain control and milk it. Some bits would be sold off, others would be closed. Previously unconsidered treasures, such as the employees' pension fund, would be raided and reinvested in Mr Posner's other companies." Posner was a maverick player in the world of corporate finance. Many of his dealings were alleged to be illegal and he was closely watched by the Securities and Exchange Commission from the mid 1980s on.

In 1969 he initiated the hostile takeover of Sharon Steel Corporation, one of the earliest such takeovers in the US. Sharon Steel had a coke plant in Fairmont, West Virginia, a steel plant in Farrell, Pennsylvania, and a coal mine in Rachel, Pennsylvania. His purchase was motivated by the company's low valuation, level cash flow, and low debt. It was intended to become a source of cash for additional investments to capitalize on the rising price of coal during the energy crisis of the early 1970s. His investment would be the forerunner of the leveraged buyout and junk bonds business of the 1980s. Meanwhile, the Fairmont coke plant was one of the worst polluters in the Monongahela Valley and Posner stopped investing in it. It closed in 1979.

The late 1980s were the start of his downfall. In 1987, Sharon Steel operated in Chapter 11 bankruptcy protection. At first, Posner stayed on as CEO and chairman as is customary in Chapter 11 business reorganizations. Against Posner's objection, the bankruptcy court appointed a trustee to take over shortly thereafter, since Posner refused to undo some $10 million in payouts to himself and his son Steven (among other questionable transfers of corporate assets to other businesses controlled by Posner), at a time when Sharon Steel was hemorrhaging $2 million per month. On appeal, the Third Circuit affirmed. DWG was the target of a takeover attempt by Granada Investments. Evans Products operated in Chapter 11 and did not emerge until former Chairman and CEO Monford Orloff was brought back to the company and vendors and lenders were assured that Posner would leave the company. In 1988, he pleaded no contest to tax evasion and fraud for inflating the value of land he donated to Miami Christian College in 1975. He was ordered to pay more than $6 million in costs and fines and to devote 20 hours a week for five years to working with the homeless. Also in 1988, the SEC sued Drexel Burnham Lambert and charged Posner and his son Steven with scheming to conceal the Posners' purchase of stock in the electrical contractor Fischbach Corporation. Again, in 1988, a bankruptcy judge ordered him to return several original Norman Rockwell paintings to the Sharon Steel Corporation, which he had removed from the company's headquarters when he acquired the company. In 1993, both Steven Posner and he were barred by the SEC from being an officer or director of a public company. Posner died of pneumonia on February 11, 2002, after suffering declining health for several years.

Posner was a party in a landmark Florida case involving the validity and permissible scope of prenuptial agreements. Posner had two children from his first marriage: twins Steven and Gail; and two children from his second marriage to Sari Posner (m. 1960–1966): Tracy and Lance. He was not married at the time of his death. His girlfriend, former actress Brenda Nestor Castellano, was also a business partner. In 1995, Steven sued his father over alleged mismanagement of his company, Security Management Corporation, claiming that the elder Posner was paying himself too much money and had wrongly removed Steven as a company director. They settled the suit by flipping a coin over the share of more than $200 million worth of property. Steven was killed in a high speed boat crash near Miami, Florida, on 29 November 2010. Gail died on 19 March 2010 in Miami Beach, Florida. Shortly before he died, Posner prepared a new will that removed his children and grandchildren as heirs to his estate, which was valued between $200 million and $1 billion. Instead, Brenda Nestor was named as the main beneficiary. Posner's children and his adult grandchildren sued on grounds that he was not competent when he made the changes. Nestor still operates Victor Posner Enterprises, a property development company in Florida.