BACK IN THE DAYS WHEN the oil business was as young and hot as the Internet is today, Louis Blaustein was a player.

If there had been CNBC at the turn of the century, Blaustein might have been on camera as often as Steve Case, the chairman of America Online Inc.

John D. Rockefeller, of course, was the Bill Gates of oil. Blaustein was one of his business associates, a petroleum Paul Allen.

Neither a synonym for wealth nor a surname for succulent oysters, Baltimore's Blaustein dynasty nonetheless endures, ranked by Forbes magazine among America's 50 richest families. The fortune is based on American Oil Co., known as Amoco, which Louis and his son Jacob founded in 1910.

As the oil business evolved through the process of consolidation and restructuring that is just now beginning in the Internet industry, the Blausteins were eased out of their positions of power at Amoco, one of the many brands of gasoline that trace their roots to Rockefeller's Standard Oil trust.

Louis Blaustein's descendants kept considerable stock in Amoco, which in 1998 merged with British Petroleum PLC to create the world's third largest oil firm, called BP Amoco PLC. Over the years family members acquired multimillion-dollar blocks of other companies and became the big names of Baltimore business and philanthropy: the Blausteins, the Rosenbergs, the Thalheimers.

But through it all they hung onto the controlling stock in a little oil company that Louis Blaustein acquired in the 1930s--Crown Central Petroleum Corp. of Baltimore.

Crown Central, with annual revenue of $1.3 billion in 1999, has a pair of refineries and 327 service stations. By the standards of the oil industry, however, a billion a year is bupkus. Industry leader Exxon Mobil Corp. took in $164 billion last year. It's like the fourth-generation offspring of Paul Allen ending up with investments worth billions and, just for old time's sake, a local chain of computer stores.

But oil is in the Blaustein blood and now Henry A. Rosenberg Jr., the late Louis Blaustein's grandson and chief executive of Crown Central, is in the midst of a bitter fight to maintain control of the company.

Crown is struggling--and has been for years--because it is too small to create the economies of scale that make "bigger is better" the rule in the oil business. As the petroleum companies got bigger, Crown's stock price got smaller. Crown's stock was as high as $40 a share in 1996 and two years later was still worth $20. But it fell to $4.75 late last year because of continuing losses and labor problems at the company's Texas refineries. The stock recently climbed back to more than $9 a share because a bidding war has broken out for Crown.

The phrase "bidding war" is a bit of an overstatement. Enough belligerence is involved to qualify it as a war and control of the company is at stake, but both Rosenberg and his rival are defensively increasing their offers.

The contest began last November, when Paul A. "Tony" Novelly, an independent oil man from St. Louis, proposed merging his privately owned Apex Oil Co. with Crown. Novelly's argument: You've got gasoline stations and refineries, I've got wholesale terminals and marketing operations; we'd make a great marriage.

Details of the offer were sketchy and with Crown stock trading at less than $5 a share, it was easy to see why the offer did not thrill Crown stockholders, especially the Rosenbergs, who own about half the company.

Novelly, a longtime Crown shareholder, owns 10.7 percent of the company's stock. That makes him the biggest outside investor, but not a threat to the Rosenbergs. The Rosenbergs hold 49 percent of Crown's Class A stock, which has 10 votes a share, and 11 percent of its Class B stock, with one vote a share.

As with other companies that have two classes of stock, such as The Washington Post Co., the structure is meant to maintain the control of the founding family. Henry Rosenberg has run the company for years and has signaled his intentions to pass it on to his son Edward.

Realistic or not, Novelly's offer put Crown into play. The Rosenbergs rebuffed the bid but hired Credit Suisse First Boston to give Crown advice on "strategic alternatives to enhance shareholder value." In other words, come up with a plan to buy or sell the company.

In March, the Rosenbergs offered to buy out the rest of the Crown stockholders for $8.35 a share. The buyout offer was made by Rosemore Inc., a family holding company headed by Edward Rosenberg.

By then Crown's stock was trading at more than $7 a share, but for anyone who had held the shares for a couple of years--Novelly included--$8.35 was a low-ball bid, an insulting offer that would mean a huge loss on the stock.

Shareholders screamed, none louder than Novelly, who responded with a series of counteroffers involving an investment in the company, a merger with Apex or a cash offer of $9.20 a share.

In response, Rosemore raised its offer to $9.50 a share and Novelly came back with $10.50. Crown's board voted to take the lower bid. The board, handpicked by the Rosenbergs, contended that Novelly had yet to demonstrate that he could come up with the money, even though he had produced letters of credit from two lenders.

At either price Crown appears to be a bargain because the company's book value is $14.47 a share.

How much the company is really worth, of course, is what the whole argument is about.

Novelly's side is circulating numbers that it says came from financial advisers hired by the Rosenbergs valuing the business at $13.28 a share and potentially as much as $20.

The value of $13.28 a share is based on what Crown's refineries, gasoline stations and other real estate would be worth if they were sold. The higher value of $20 a share looks bogus. It comes from "blending" valuations that were placed on the various segments of Crown's operations by two different firms. For each segment, the firm that gave the higher value was picked and those numbers were added up, producing a bigger total than either of the actual evaluations.

But any way you look at the valuations, $9.50 a share seems cheap. And so does $10.50 a share. Both bids are less than the book value of the company, less than the liquidation value and a fraction of what the stock was worth two years ago.

If Crown sells for either $9.50 or $10.50 a share, it will be a steal, but a bargain with its share of baggage. At the retail level, Crown's competition is getting tougher because of the recent mergers of Mobil and Exxon, BP and Amoco. The multinational giants can sell gasoline cheaper than Crown. The bigger companies can afford to spend more on advertising, marketing and customer-catching innovations, such as Mobil's Speedpass, a little wand that when waved at the pump automatically charges your purchase to a credit card. Independent gasoline providers such as Sheetz are moving much faster than Crown into combination service station/convenience stores that generate both higher sales volumes and greater profit.

Crown's refineries are flawed, too, and will require millions of dollars in upgrades to comply with new environmental regulations coming in the next decade.

The Texas facilities also are afflicted with ugly labor problems. The company locked out union workers in 1996 and has kept them out. The Paper, Allied-Industrial, Chemical & Energy Workers Union has threatened boycotts. In a big labor town like Baltimore, where the retail operations are concentrated, there undoubtly are union workers who drive right by Crown stations on principle.

The labor strife brought the AFL-CIO Office of Investment into the Crown Central bidding. The unions have attacked the Rosenbergs as old-fashioned robber barons, a sting to a family long identified with Baltimore civic and charitable causes.

The AFL-CIO has urged Crown stockholders to vote against accepting the Rosenbergs' offer of $9.50 a share, which comes up for a vote at a special shareholders meeting set for Aug. 24.

Henry Rosenberg and Tony Novelly are making their arguments in the usual forum--proxy statements, drafted by their securities lawyers, soliciting votes at the special meeting.

Shareholders won't be able to vote in favor of selling to Novelly, only for or against accepting the bid from the Rosenberg family company. If the family can't muster the two-thirds vote required to buy out the other stockholders, it retains control of Crown Central.

The election doesn't offer much upside for Crown shareholders, as reflected in the stock prices. Both classes of Crown shares closed Friday at $9.12 1/2.

(c) 2000 The Washington Post Company