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Sunday, September 29, 2002



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[ THE BIG 5 ]

Isle institutions’
economic impact endures

3 members turn to real estate and
retail ventures after ownership changes
and the decline of local sugar and pineapple

Big 5 profiles


By Lyn Danninger
ldanninger@starbulletin.com

Statehood in 1959 forever changed the fields for the Big 5. Their political clout weakened, though their economic power lived on. Sugar cane and pineapple went out of favor. Hotels and resorts sprouted. The Republicans lost office and the Democrats became entrenched.

In 1964 the Department of Justice sued to challenge the majority ownership of Matson Navigation by four of the Big 5. In addition to controlling Hawaii's sugar industry, A&B, Amfac, C. Brewer and Castle & Cooke together owned nearly three-quarters of Matson, and Matson carried 80 percent of all cargo shipped between the mainland and Hawaii. As such, competition between Matson and other water carriers was limited, violating anti-merger and restraint-of-trade laws, the feds said.

Theo H. Davies was the only member of the Big 5 that did not own Matson stock.

The lawsuit was settled under a consent decree that barred the four companies from sharing officers, executives and directors. A&B acquired 94 percent of Matson, buying out the other three firms for $22 million.

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HAWAII STATE ARCHIVES
The C. Brewer & Co. building, also known as "Market House," around 1900-1910.




In the 1970s, sugar mills and plantations began to close, and members of the Big 5 started getting bought out.

Theo H. Davies was sold in 1973 to Jardine Matheson & Co., a British firm based in Hong Kong. Davies diversified, buying the assets of Eurocars of Hawaii Ltd. in 1979, then exited the sugar business in 1984 by selling the now-defunct Hamakua Sugar Co. to one of its executives. Davies also acquired Hawaii's Pizza Hut and Taco Bell franchises.

Philadelphia-based IU International Corp. picked up full ownership of C. Brewer & Co. in 1978. Eight years later, J.W.A. "Doc" Buyers led a leveraged and complex $200 million management buyout of Brewer. Last year, Brewer's shareholders voted to liquidate the 175-year-old firm.

Los Angeles billionaire David Murdock became chairman of Castle & Cooke in 1985 by merging the company with his Flexi-Van Corp. Murdock acquired full control of C&C in 2000. The firm still has large ownership of Central Oahu and Iwilei as well as nearly all of the island of Lanai. Dole Food is a separate, publicly held company based in California, with Murdock as its chairman and CEO.

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STAR-BULLETIN FILE
Fresh pineapple being packed in 1964 at Dole Co., then a Castle & Cooke unit.




Amfac, along with its 60,000 acres in Hawaii and its Liberty House chain, was sold in 1988 to Chicago-based JMB Realty Corp. for just less than $1 billion. Earlier this year, Amfac filed for Chapter 11 bankruptcy reorganization, heavily in debt with most of its assets sold. Liberty House has been sold and converted to Macy's West, its one-time competitor in San Francisco.

A&B is the only member of the Big 5 that has not quit sugar and was not bought out, though the company's management fought a proxy battle in 1985 against dissident shareholder Harry Weinberg. Weinberg had sought to eject pro-management directors and argued that A&B shareholders could get a better return if its land or the company itself were sold.

Instead, then-Chairman Robert J. Pfeiffer and management won control of the firm's board, garnering 60.7 percent of shares in an election, and ousted Weinberg.

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STAR-BULLETIN / JANUARY 2001
Long a fixture in Hawaii, Amfac's Liberty House stores have been sold and converted to Macy's.




A&B's biggest business is ocean transportation, thanks to its ownership of Matson. The firm is Hawaii's fifth-largest private landowner with 91,000 acres, putting it just behind Castle & Cooke, Damon Estate, Parker Ranch and Kamehameha Schools. A&B also owns 17 commercial properties on the U.S. mainland.

The company recently made several property purchases on Oahu, including two neighborhood shopping centers in Mililani and Kaneohe. In April, A&B attempted to buy Kakaako landowner Victoria Ward Ltd. but was outbid by Ala Moana Center owner General Growth Properties Inc. of Chicago.


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Profiles of the Big 5,
then and now


By Tim Ruel
truel@starbulletin.com

C. Brewer & Co.

>> Founded: 1826

>> Founder: Capt. James Hunnewell

>> Past: The history of the first of the Big 5 stretches back to 1826, shortly after the arrival of Protestant missionaries to Hawaii, when Massachusetts native Capt. James Hunnewell began trading sandalwood with China. His business grew into a trading house. The firm's modern namesake, Capt. Charles Brewer, became a partner in 1836, and C. Brewer & Co. specialized in supplying whaling ships. When the whaling business began to dive, Brewer looked toward sugar and molasses, and in 1863 the firm became an agent for three Maui plantations.

>> Today: The firm's private shareholders have voted to liquidate the company, including its 70,000 acres, over several years.


Theo H. Davies & Co.

>> Founded: 1845

>> Founders: James Starkey and Robert C. Janion

>> Past: What started as a small isle trading company in 1845 was boarded 12 years later by Theophilus Harris Davies, who came to Hawaii from Britain at the age of 23. After the overthrow of the Hawaiian government in 1893, Davies and Princess Kaiulani went to Washington, D.C., to ask President Grover Cleveland to restore the monarchy. The firm Davies worked for expanded into other businesses including sugar, transportation and insurance, and became known as Theo H. Davies & Co., the smallest of the Big 5.

>> Today: Davies is a unit of Hong Kong multinational giant Jardine Matheson Holdings Ltd., and owns Hawaii's Pizza Hut and Taco Bell franchises as well as Pacific Machinery.


Amfac

>> Founded: 1849

Amfac/JMB Hawaii >> Founders: Heinrich Hackfeld and J.C. Pflueger

>> Past: H. Hackfeld & Co. was founded as a merchandising firm in Honolulu in 1849 by German captain Heinrich Hackfeld and his brother-in-law J.C. Pflueger. Hackfeld became a business agent for Kauai's Koloa Plantation, the first long-lived sugar plantation in the islands. Shortly before Germany's defeat in World War I, an agent for the U.S. Alien Property Custodian sold the company for $7.5 million to a consortium that included Alexander & Baldwin, Castle & Cooke, C. Brewer and other companies. The new firm was called American Factors Ltd., later shortened to Amfac.

>> Today: Liberty House went into Chapter 11 bankruptcy in 1998, and Amfac Hawaii did the same this year. Their parent, JMB Realty Corp. of Chicago, gave up on sugar and sold off much of Amfac's assets.


Castle & Cooke

>> Founded: 1851

Castle & Cooke >> Founders: Samuel Northrup Castle and Amos Starr Cooke

>> Past: Castle & Cooke was formed in 1851 by missionaries Samuel Northrup Castle and Amos Starr Cooke. It sold farm tools, sewing machines and medicine. In 1907 the firm became the Hawaii agent for Matson Navigation. C&C acquired a stake in Matson. Around the end of WWII, Castle & Cooke also had taken a significant stake in James Dole's Hawaiian Pineapple. The firm was later renamed Dole Co. and became part of Castle & Cooke's food division. The takeover took place after James Dole attempted to ship pineapple with a Matson rival, according to "Land and Power in Hawaii," by George Cooper and Gavan Daws.

>> Today: The firm is owned by Los Angeles billionaire David Murdock, who separated C&C from Dole Food in the 1990s. C&C owns major plots on Oahu and most of Lanai island, which Murdock has redeveloped into a resort destination.


Alexander & Baldwin

>> Founded: 1870

A&B >> Founders: Samuel Thomas Alexander and Henry Perrine Baldwin

>> Past: In 1869, Samuel Thomas Alexander and Henry Perrine Baldwin bought 12 acres at Makawao, Maui, for $110 to grow sugar cane. Alexander & Baldwin, established the next year, was the only member of the Big 5 that started in sugar. Baldwin lost his right arm in a factory accident, but still the company managed to dig a 17-mile irrigation ditch that took millions of gallons of water from Haleakala to East Maui. In 1889, the firm established the Hawaiian Sugar Co. at Makaweli, Kauai. Five years later, A&B opened its own sugar agency in San Francisco, and in 1898 the firm took over the Hawaiian Commercial & Sugar Co. in Puunene, Maui. A&B became a Hawaii corporation in 1900.

>> Today: A $919 million publicly traded company that owns Matson Navigation and has vast land holdings on several islands and 17 commercial properties on the mainland.



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