11.13.05
Cure for Hostile Takeover? Hire The Best Doctor
In 1989 the Motor Company became the takeover target of an investment group led by gazillionaire Malcolm Glazer (if the name rings a bell, it may be because he owns the NFL’s Tampa Bay Buccaneers and, quite unpopularly, the English Premier League’s Manchester United). Nobody saw this one coming. Glazer swiftly began acquiring large amounts of HD stock and filing documents making his intentions official: He was seeking to acquire a controlling interest in the company. Uh oh.
Without boring you with legal and financial minutia, let me just say this was a very serious thing. The company was just in the beginning flushes of success and to be brusquely bitch-slapped by the thought of it being taken over by someone else was bringing no pleasure and plenty of jagged nerves at 3700 W. Juneau Ave. The rumor mill was in overdrive.
As word spread, HD’s stock price ratcheted upward as many investors assumed that the company was in play and were hoping to profit handsomely when their shares would eventually bought by Mr. Glazer at an inflated price. HD couldn’t just raise the corporate sword and say, “Buzz off, sir. You’re not welcome here.” The financial world doesn’t work that way (and sometimes, a takeover is a good thing that benefits shareholders). So important – and experienced — voices needed to be heard and battle plans needed to be drawn to make sure everything was done responsibly and legally. And pronto.
I found myself in a small chartered plane, bee-lining to New York. On the plane were then-CEO Vaughn Beals, then-CFO Rich Teerlink, HD’s legal beagle and roving raconteur Tim Hoelter (way too funny to be a Harvard-educated lawyer) and yours truly. We were off to visit attorneys at the highfalutin firm of Simpson, Thacher & Bartlett. I asked Beals something to the effect of, “How come were flying to New York when it would be a lot more convenient and cheaper to be working with attorneys closer to home?” And he said, as only he could, “If your baby boy (my first born had very recently entered the world) was sick, would you want him to have the best doctor you possibly could?” and before I could cough up my reply, he said “Well, my baby’s sick.” Uh. Yes sir!
Long story short, HD quickly took all the appropriate legal steps required to stave off the takeover, Glazer sold his shares and the dust settled. “Poison Pill” provisions adopted by the company and approved by shareholders would make an unwanted takeover extremely expensive for any would-be suitor and thus highly unlikely. Bullet dodged.
In the “life just ain’t fair” category, dig this: In the few short weeks of this escapade, Glazer’s holdings and the value of HD’s shares rose dramatically. By selling, he profited by many millions of dollars. Many, many millions. Smart cookie, that one. Pink Floyd comes to mind: “New car, caviar, four-star daydream, think I’ll buy me a football team.” And he did. Twice! Better living through motorcycles.