George Murphy was riding high in the mid-1960s. He owned a string of GM dealerships in Hawaii and California. He was named Hawaii’s Businessman of the Year in 1965. Time magazine profiled him less than a year later. And he’d just pocketed $15 million from turning around Honolulu Iron Works. The obvious next step for him then was to buy Studebaker just before it quit building cars.
To Murphy, it made perfect sense. The Saskatchewan native had been selling cars since he joined his father’s Chevrolet dealership in 1921. He later established his own Oldsmobile dealership in Honolulu in 1938, leveraging the success of that to buy into Aloha Chevrolet in 1940. His modus operandi, as he explained to the Wall Street Journal in 1940, consisted of buying “rundown, poor management companies” then turning them around, though during World War II he also found a successful scheme buying trucks in bulk then turning around and selling the trucks to the U.S. and Allied governments right when they needed trucks the most. Under his ownership, Aloha expanded by selling GM vehicles—including Holdens—all around the Pacific Rim, eventually becoming the largest General Motors dealership in the world.
Studebaker’s automotive division, meanwhile, had been in freefall. In 1963 alone, it lost more than $25 million, prompting the company—which had already started to diversify its holdings years prior—to close the South Bend, Indiana, plant and move production to Hamilton, Ontario. Murphy sensed an opportunity with Studebaker, so in February of 1966, after selling Honolulu Iron Works, he approached Studebaker chairman Randolph Guthrie with an offer to buy 500,000 shares of Studebaker stock—more than a sixth of the outstanding shares of common stock—at $30 per share, above market price. The offer came out of left field, according to a lawsuit between Studebaker and Allied Products, a Studebaker supplier that also entered in negotiations to buy the company immediately after Murphy’s offer. Studebaker’s board of directors appeared in favor of Murphy’s offer but ultimately left the decision up to the stockholders, who, by all indications, let the offer die on the vine. Guthrie, in turn, rejected Allied’s offer, and a month later Studebaker shut down the Hamilton assembly line, bringing an end to the company’s car making efforts