The Takeover

by Stephen W. Frey

  “Call an ambulance!” Falcon yelled at Prausch.

  “No!” Chambers coughed again. “No, I’ll be all right.” He steadied himself on the table.

  Prausch hesitated.

  “What are you waiting for? Go!” Again Falcon yelled at Prausch.

  Chambers grabbed Falcon’s hair tightly and brought his face directly in front of his own. “I told you not to send for an ambulance!”

  Falcon stared into the yellow corneas. Death was very close to claiming this one. And though he had taken an immediate dislike to the man, he had to respect Chambers’ tenacity to fight the inevitable. “All right. It’s your life.”

  At Chambers’ request, the three men helped him to his feet. For a few minutes he stood, leaning against the table as he sipped water and wiped his face. Then he sat, pronounced himself fit, and pointed at Falcon. “Get going.”

  Falcon hesitated.

  “I said, get going, boy. What’s the matter, haven’t you ever seen someone with a little chest cold?”

  Falcon stared at the man for a few moments, then sat down and began.

  For the next forty minutes he explained the public-tender process, from the point Veens & Company would announce its offer to purchase—long, technical documents published in tiny print in the New York Times business section, the Wall Street Journal, and the Financial Chronicle—to the point at which Veens would take control of Penn-Mar. He explained that there were no significant concentrations in the stock—no individuals or related groups that owned more than five percent of Penn-Mar’s shares. Which was good, because large holders could work together to drive the price even higher than what Veens wanted to pay. He explained the Williams Act—the body of laws regulating public-tender offers—the Hart-Scott-Rodino antitrust statutes, and the reams of Securities and Exchange Commission documents they would have to file. He explained the maximum per share value he attributed to the company and the process by which he had determined the valuation. He discussed potential competing bidders, the Delaware Statute, and the divisions he would recommend for sale immediately following the transaction, and who the most likely buyers for those divisions would be. He explained how Veens & Company would pay for the shares; what levels of debt and equity would be used; what interest rate and fees the banks and junk-bond investors would require for their money, which Veens & Company would use to pay for the shares; and what return Veens & Company could expect from its huge investment in Penn-Mar Chemical Corporation.

  The three men did not interrupt him once. They sat and listened, as if mesmerized. Falcon’s presentation was technical and concise, and when he had finished, he closed the booklet from which he had delivered his monologue and glanced about the huge room. “The acoustics are better in here than I thought they would be.” His gaze finally came to rest on the three men. They were impressed, he could tell. He had seen the look on countless other faces before. “Questions?”

  Finally Chambers spoke. He seemed to be completely recovered from the coughing attack. “Falcon, you stated that you believe the top value for the shares is seventy-five dollars.”

  “Yes. And that’s generous.” Falcon glanced at Barksdale, who was staring at his fingernails. It was more than generous. It was too much. But that was what Barksdale required.

  “That is based on a discounted cash-flow analysis?”

  “Yes. I projected the company’s operations for the next ten years and discounted the resulting cash flows, assuming a terminal value for all of the cash flows after the tenth year.”

  “What discount rate did you use?”

  “Ten percent.”

  “And what growth factor?”

  “Four percent.”

  “That’s your problem. That’s why you are only coming up with seventy-five dollars a share as a value for Penn-Mar. The growth factor for the terminal value should be much higher than four percent. Penn-Mar has a new fertilizer product, which has been kept very secret. It will quickly add half a billion dollars in annual revenue to Penn-Mar’s income statement. I also know that they are negotiating a long-term contract with the Russian government to provide certain industrial chemicals. It will involve the construction of four plants in Russia. That could double the size of the company in five years.”

  “Are you suggesting that we should pay more than seventy-five dollars a share for Penn-Mar?”

  “I’m suggesting that we must be prepared to go higher,” said Chambers. “I believe seventy-five is a fair bid and we should start at that price. But we shouldn’t be surprised if our initial bid is topped. I don’t think DuPont or Hoechst will allow Penn-Mar to slip away at that price without a fight. Both of those companies would enjoy tremendous synergies with the acquisition of Penn-Mar. They could fire thousands of middle managers and administrative people and add a great many new products without spending a dime on R&D.” Chambers’ voice was almost inaudible. He coughed again.

  Immediately the other three men leaned forward, but there was no cause for alarm this time.

  Falcon waited until he was certain that Chambers was not about to endure another coughing attack. “The Department of Justice would never let DuPont or Hoechst acquire Penn-Mar. Those companies would control one hundred percent of the market for certain chemicals if they acquired Penn-Mar. The antitrust people at the DOJ would have a field day.”

  “Mr. Falcon, you and I both know that the DOJ is almost as unpredictable as our President. We cannot count on them to protect us. Make no mistake. We need to acquire this firm. We must acquire it. Therefore we must be prepared to pay more than seventy-five dollars a share.”

  “I have to disagree—”

  “Don’t ever disagree with me, boy.” Chambers pointed a bony finger at Falcon. “You’re just the hired hand. You take orders from me.”

  Falcon leaned back in his chair. He didn’t like the term boy. “You hired me to advise you.”

  “Falcon—” Barksdale began.

  “Shut up, Barksdale!” Barksdale’s head dropped immediately, and Chambers turned back to Falcon.

  “To advise you,” Falcon continued. “That’s what I was hired to do. Although I didn’t realize that the mandate included saving your life.” Falcon’s eyes narrowed.

  For a split second Chambers smiled, and his face became instantly sinister. Then just as quickly, it reverted to its former shape. “When will we announce the takeover?”

  “Boreman will be back from Tokyo tomorrow night.” Barksdale spoke up, desperate to validate his presence at the meeting. “He tells me things are going quite well there. He stopped in Europe on his way to Japan, and he says that several of the French and Italian banks are very interested also. We did not bother going to the Germans. They are too damn conservative. No offense.” Barksdale nodded at Prausch. “The banks will need a day or two to go through Mr. Falcon’s numbers, but based upon his meetings so far, Boreman believes the banks will come through to fill out the twenty billion or so of additional bank debt we need. NASO is ready to commit thirteen billion through several areas of the bank and its securities subsidiary.” Barksdale raised an eyebrow at Falcon. “I think we should be ready to go by Wednesday of next week.”

  “Fine.” Chambers turned to Falcon. “I think it’s time for you to begin working with the lawyers to draw up the papers.”

  Falcon nodded. It was premature, but he wasn’t going to argue anymore. He wanted the five million and he didn’t need any more of Chambers’ condescension crap.

  “Falcon, we’ll need to send copies of your presentation to those banks in Europe and Japan that are interested in coming into the deal. I will give you a list after we are done here.” Barksdale cleared his throat. “Then you’ll have to be ready to talk to them. To take them through your analysis. It’s going to be a busy few days for you.” He tried to sound important, but Chambers was paying no attention.

  “Not a problem. I look for
ward to it.” Falcon glanced at Chambers. The man was staring at him as if he were trying to bore into his mind. He seemed somehow inhuman.

  “I’ll call Dunlop & Latham and tell them you will be in their offices first thing tomorrow morning to begin drafting the documents.” Barksdale pounded the table. “I’ve had them on standby for two weeks.”

  “And you are certain they can maintain confidentiality?” Chambers seemed vaguely uncomfortable.

  “Absolutely. We are close to them. They are trustworthy.”

  “Good.”

  “There’s something else we need to discuss,” Falcon said.

  “What’s that?” Chambers snapped.

  “The Federal Reserve. Specifically, Carter Filipelli, the chairman.”

  “Why do we need to worry about Filipelli?” Chambers seemed annoyed.

  “Once Filipelli gets wind of this thing, I think he’s going to shut it down very quickly. And as chairman of the Fed he can do that. Besides hauling NASO into court for violation of legal lending statutes, Filipelli can make life for NASO very difficult in myriad other ways.”

  Chambers waved his hand at Falcon as if this point was irrelevant. “Is there anything else you can think of that is important for us to know about Penn-Mar?”

  Falcon leaned back in his chair and smiled at Chambers. Fuck him. The Fed was going to come down on them. It wasn’t a question of whether—it was a question of when. If he didn’t want to listen, fine. “Well, Penn-Mar’s not a very safe place to work if you are a senior executive. Especially if you are the senior vice president in charge of operations.” Falcon laughed as he stretched.

  “What is that supposed to mean?” Chambers moved forward in his chair.

  Falcon thought he detected something odd, vaguely strained, in Chambers’ voice. “I’m sure it’s just coincidence, but the two people who have held that position in the last year have ended up dead. Both deaths involved strange circumstances.”

  “Go on.” Chambers closed the booklet before him.

  “About a year ago a man named Tom West was killed in a terrible automobile crash in Toledo, Ohio. West was SVP in charge of operations at Penn-Mar.”

  “An unfortunate occurrence, but I don’t see what is so strange about that,” Chambers hissed.

  “The car was travelling at a great rate of speed down a hill in Toledo one night in June of last year. At the bottom of the hill, there was a fairly sharp turn, which West didn’t make. The car flipped over on its top.”

  “Again, I don’t—”

  Falcon ignored him. “When the police arrived, old Tom was still strapped into the driver’s seat by his safety belt. There was blood all over the place. Lots of it, in fact, on the back of the seat. Just one problem, though. The blood was dried, and it had flowed down the seat toward the floor of the car. But the car was flipped over on its roof. Evidently Mr. West was dead beforehand, and then someone put him into the car. The police never were able to pin it on anyone, though. They called it an accidental death, but it wasn’t.”

  “How do you know all of this?” Barksdale asked.

  “The story was on Bloomberg. The part about the blood I got from a very nice detective on the Toledo police force. I called them for fun. Doing all that work on the computer was sometimes boring, and I needed a break. I didn’t really think I’d get anything out of them. But small-town cops can be pretty forthcoming if you know how to ask the questions.”

  “You mentioned that there were two people who had died,” Chambers said pointedly.

  “The second SVP was murdered recently in Temperance, Michigan, just across the state line from Toledo. His name was Jeremy Case. He was the person who took Tom West’s position. The circumstances surrounding Case’s death were even more bizarre than those of West’s. Case was a born-again Christian. When he wasn’t at work he was at church with his wife and two all-American kids. Anyway, he turns up dead at a strip mall next to the body of an unidentified Iranian guy. There are all these pictures of some naked woman strewn around the bodies, not to mention two guns. It appeared that the two men killed each other, perhaps over the woman, but it didn’t fit with Case’s background. Here’s this wonderful father, whom everybody in the community loves, killed at around one in the morning an hour away from his home at some remote strip mall. It made no sense. They never did identify the Iranian or the woman in the pictures. All of that was on Bloomberg too. Strange, huh?”

  Chambers did not answer. He did not say a word. He simply stared at Falcon. But behind the stony exterior he cursed Granville Winthrop.

  * * *

  —

  The late-afternoon sun shone down on 82nd Street, casting long shadows on the sidewalk. Falcon walked slowly, suit coat slung over his shoulder. Why was he so worried about the fact that these people were willing to overpay for Penn-Mar? They were every investment banker’s dream. They didn’t care if they overpaid. They just wanted Penn-Mar, at any cost. But why? Why was it that important?

  There I go again, Falcon laughed. Take Chambers’ advice. Shut up and be the hired hand. You’ll earn five million dollars, and you’ll make Granville green with envy. Once the deal is announced, it will be all over every business page in the country, along with my name as the lead investment banker. Granville will have one of his aides order the takeover documents filed at the SEC, and when he sees the fifty-million-dollar fee, he’ll go ballistic. He’ll think about that evening at the Harvard Club and wish he’d taken me up on my offer. He’ll wish he’d returned my calls. Even if it will be just the money he’ll regret missing out on.

  And what a piece of shit Chambers was. Hadn’t thanked him once for stuffing the pills in his mouth and averting a coronary.

  Falcon looked up from the sidewalk. Jenny Cagle was leaning against the wall outside the entrance to his apartment building. She wore a light sundress that fell only to the middle of her thighs. She did not have the rail-thin body Alexis possessed, but suddenly he rather preferred Jenny’s full figure. His mind drifted back to the night at the Four Seasons. She had been incredible.

  As Jenny saw Falcon approaching, tie loosened, suit coat draped over one shoulder, and Wayfarer sunglasses protecting his eyes, she smiled and moved quickly to him. When she reached him, she touched his arm gently. “I’m sorry for the way I acted on the telephone. For the way I’ve been acting in general. I want you to accept my apology.”

  Falcon grabbed the olive branch immediately. “I’m the one who should apologize.”

  They stood facing each other, neither knowing what to say.

  Jenny’s eyes dropped to the pavement. “That’s all. I guess I should get going. I don’t want you to get in trouble with Alexis in case she shows up.”

  Falcon shook his head. “No, she’s in Connecticut until late this evening. Very late.” He knew he shouldn’t have said it. He could have just as easily agreed and ducked inside the apartment building. The truce was made. They were friends again. He could have left it at that.

  Jenny looked up from the sidewalk and smiled slyly. “Want to have a beer? Just one quick, cold beer at the end of a long, hot week to cement our understanding. Come on, it will taste really good.”

  “I’ve still got a great deal of work to do.” But the truth was he didn’t have any work to do. The packages would not reach the banks in Europe and Japan until late tomorrow, and their bankers wouldn’t be ready to discuss the contents for a day after that, Sunday midday at the earliest. He didn’t have to be in the offices of Dunlop & Latham until ten o’clock tomorrow morning, and there was nothing he could do to prepare for that marathon.

  Jenny pouted. “Just one. I’m so thirsty.”

  So she couldn’t stay mad at him. He removed the sunglasses and broke into a wide grin. “Okay.”

  “Great.” She took his hand and began to pull him gently down 82nd Street. “I heard about this great Mexican place from a secre
tary at NASO. I think it’s close.”

  Falcon stopped her. “I have a better idea.”

  * * *

  —

  Manny’s Pool Hall was dark and mysterious. Jenny glanced toward the front of the place from her barstool. The lone window next to the door was covered with a thick curtain so that the bright sunshine of the afternoon could not invade this tiny corner of Trenton.

  Jenny brushed her hair back with her fingers. It was a wreck, she was certain of that. But she was also certain that she wasn’t going to use what was probably a cracked and dirty mirror in Manny’s unsavory ladies’ room to freshen up if she could help it. At least not without an armed guard standing outside the door.

  Falcon had driven a million miles an hour down the New Jersey Turnpike, covering the fifty miles from Manhattan to Trenton in what seemed like just minutes, dodging the other cars as if they were playing a video game. He was trying to scare her, but it hadn’t scared her at all. She loved going fast. And she sensed immediately that Falcon was in complete control of the vehicle by the way he handled the steering wheel and the way he used the gears more than the brakes to slow down the car. Jenny had also noticed how Falcon had driven straight to the pool hall, without directions from anyone. As if he had been coming here all his life.

  “What’ll ya have, little lady?” The bartender yelled the words condescendingly over the loud rock music blaring from the speakers positioned near the ceiling. The barrel-chested, hairy-armed man stared unapologetically at the exposed skin between her breasts. He smiled lewdly at her. This woman was out of her element. She was dressed much too nicely for Manny’s. And he wasn’t about to make her visit here any easier.

  “How about a slow, comfortable screw?” Jenny ran the long nails of her fingers sexily across the wooden bar toward his chubby knuckles, but stopped just short of them.

  The man straightened up and cleared his throat. So the woman wasn’t going to be easily intimidated. Worse still, he didn’t know how to fix that drink.