Takeover

by Brian Freemantle

  “We’ll see if he’ll say the same thing on oath. And Lady Harvey.”

  “You intend calling her?”

  “Of course,” said the barrister. “Dozens of shareholders with their good money entrusted into Buckland House care have been told the occupation of that house was entirely innocent. If we prove otherwise then we prove Buckland’s unfitness to remain inviolate because of the share arrangement. We’ve traced her already to Antibes.”

  “The shares opened at 90p this morning,” said Rudd. “Just before I came here they were 88p.”

  “On the face of it,” said Dray, “you haven’t made a very wise investment, have you?”

  “I’ve placed buy orders, to mop up,” said Rudd. “It’ll stop them going below 85p.”

  Dray frowned. “Company or personal purchases?” he said.

  “Personal,” said Rudd. “I haven’t got board approval to buy in Best Rest’s name.”

  “That could be expensive for you.”

  “I know,” said Rudd. “It’s the professionals who are getting out.”

  “Normally there’d be a rise when the takeover bid was declared,” said Dray, “but I wouldn’t expect that in this case, preceded by the court hearing.”

  “I don’t,” said Rudd. The continued slide of the Buckland House shares represented a further loss of Best Rest of $400,000; it was probably a good idea that he was going back to New York after all. It was still inconvenient. Now that there was a time limit, he wanted to get a positive decision from Margaret.

  “By the time this is over, you’re going to be pretty unpopular with some people.” said Dray.

  “I’m not in business to make friends,” said Rudd. Only one, he thought.

  “Under the Fair Trading laws of this country there is a panel to which your ultimate bid could be referred and declared unacceptable if it’s thought to be creating an unfair monopoly,” said Dray. “Fortunately you don’t own other hotels here, so I don’t expect it, but I think you should be warned.”

  “You mean legally I’d be prevented from going ahead with the takeover?”

  Dray nodded.

  “What would my position be then?” said Rudd.

  “That’s for you to judge,” said the lawyer. “You have company and private investment in a group losing professional confidence and being run, according to what you already know, very badly.”

  “That’s a pretty frightening thought,” said the American.

  “You could always get out.”

  “But at what cost?” demanded Rudd. “On the slide already the company investment is down over $4,000,000, irrespective of my personal buying.”

  Dray leaned back in his chair and began the habitual finger-play with his pencil. “From the outset this had to be a gamble,” he said. “I think at the moment you’re locked in with little choice but to go on. As I’ve said, the Monopolies Commission is an outside possibility.”

  “‘There’s no way we could get any indication?”

  “Absolutely none,” said Dray. “It could be initiated from too many different directions. Any director of Buckland House could ask for it. Or it could be an independent government decision. But let’s not be depressive. I think we stand a good chance of winning the court case.”

  “I’ve still got to win the takeover after that,” reminded Rudd.

  Rudd used the flight from London to review everything that had happened since he began the move for Buckland House, and by the time he arrived at Kennedy airport he’d decided that the English lawyer was right; it would be wrong to become too depressive. Haffaford’s action had ended in his favour, for the later court hearing. And the share drop, although outwardly bad, would make his purchase offer more attractive. Already he was formulating an idea about how he could confront the danger of the Monopolies Commission.

  Prince Faysel had flown from England earlier in the day so all the directors were assembled by the time Rudd got to the downtown headquarters of Best Rest. He went straight to the boardroom, taking his briefcase with him. The only smile of welcome came from Bunch.

  “There’s a lot of concern about what’s happening in England,” announced Morrison, from the other end of the table.

  “You knew the facts,” said Rudd. The co-operation from the other man appeared to have been temporary: the hostility was back in his voice.

  “We wanted to hear them in more detail from you,” said Walker. “And about the shareholders’ meeting.”

  It took Rudd fifteen minutes, occasionally inviting comment from Prince Faysel, to recount the confrontation and then he continued on with the meeting that morning with Sir Henry Dray.

  Conscious of the attitude around the conference table, he omitted any reference to the Monopolies Commission: Dray had said it was an outside possibility anyway.

  “At the London close Buckland House stock was down to 95p,” said Böch. “We’re currently being traded on the market here seven points under par.”

  “I’ve intervened in London,” disclosed Rudd.

  “With company money?”

  Rudd frowned at Morrison’s abrupt demand. “I think it’s something we should consider, assembled as a board,” he said. “But at the moment it’s a personal purchase.”

  “How much have you committed?”

  “A million,” Rudd said. He wondered if the sum he had set aside with the London broker had been fully extended.

  “I don’t think it wise to commit any more company money: already we’re down $4,400,000,” said Morrison. He managed to keep from his voice the excitement he felt at Rudd risking his own fortune.

  “It had to be expected,” said Rudd. “It would be wrong to lose our nerve now.”

  “It wasn’t to be expected,” said Böch at once. “We had no idea Haffaford’s were going to do what they did.”

  “All right,” conceded Rudd. “So that’s depressed the market and caused us an initial loss. But you heard what the lawyer said, about it benefiting our case in court.”

  “Before which there’ll be enormous uncertainty and bigger drops, in London and here,” said Ottway. It was an obvious remark but he wanted to be seen to be backing the majority.

  “And in six months we could have the control and be in profit,” said Rudd, letting the exasperation show.

  “We shouldn’t be thrown off course by a temporary reversal,” supported Faysel. “And it isn’t even that. Few investments can expect to show growth at once: that’s common business sense.”

  “Would you consider putting any more of your investment fund money in Buckland House?” demanded Böch.

  Faysel was discomforted by the question. “At the moment that question doesn’t arise,” he said, trying to avoid an answer.

  “Would you, if money were available?” pressed Morrison, welcoming the direction of the questioning.

  “Because of my knowledge of what we intend, that’s a difficult question to answer,” said Faysel.

  “Without that knowledge,” pressed Morrison. “On face value does Buckland House look a good investment to you, after the bloodletting of the last few weeks.”

  “No,” said Faysel honestly.

  “Which is going to be the attitude of professional investors,” said Ottway. “That’s why they’re withdrawing.”

  “And because they’re professional they’ll come hurrying back, when we’re in control,” said Rudd.

  Morrison glanced to the secretarial bank. As he looked, a stenographer began changing a tape-recorder spool. The meeting was going exactly as he wanted.

  “We’ve made a costly investment,” he said. “I’d like an assurance from our chairman, with the benefit of yesterday’s meeting, that our pursuit of Buckland House is still a viable proposition.”

  Rudd hesitated momentarily. Then he said, “If I thought otherwise, then naturally I would recommend withdrawal.”

  “And you don’t?” said Walker.

  Again there was a pause. “No,” said Rudd. “I consider we should continue
.”

  “What’s the cost estimate?” said Walker.

  “I intend the initial offer to be 110p. If the shares remain as low as they are at present, that’ll look attractive.”

  “What’s the ceiling?” said Böch.

  “Twenty-five per cent,” said Rudd.

  Walker breathed in sharply, making a slight whistling sound. “What would that make the total cash offer?”

  “There would be variations,” said Rudd. “I estimate overall something like $200,000,000: maybe $6,000,000 more.”

  “Too much,” said Walker at once. “We’d extend our reserves and have to consider borrowing maybe $30,000,000. I don’t think we should go any higher than fifteen per cent.”

  “That’s too tight,” protested Rudd. “If there’s a takeover battle with someone else, I’ll need more room than that.”

  “There’s a time to go on and a time to stop,” said Böch. “I agree with Walker. Fifteen should be the top.”

  “And a time limit,” said Walker. “In little under a month, we’ve seen more than $4,000,000 taken off our value. If this thing becomes protracted, then God knows how much more it could be.”

  “That’s unreasonable!” said Rudd. “How can we possibly forecast and make a decision about how long it’s going to take!”

  “The court hearing is fixed for three weeks’ time?” said Morrison, referring to Rudd’s earlier briefing.

  “Yes,” said Rudd.

  “To last how long?”

  “I haven’t been given an estimate,” said Rudd. “Possibly a week, maybe less. If we’re successful, as the lawyer is sure we will be, I’d make the offer immediately afterwards.”

  “Another month for conclusion then?” said Walker.

  “It could take much longer!” pleaded Rudd. This had been the degree of opposition during his first year of chairmanship. He’d forgotten it and didn’t like the re-emergence.

  “A month from the date of offer,” said Böch decisively.

  This wasn’t spontaneous, Rudd decided. It had all been prepared and rehearsed in advance. He gazed steadily at his father-in-law, sure of the manipulator. Why, he wondered?

  “These conditions are intolerable,” he said. “You’re sending me to fight with my hands tied.”

  “The chairman should be allowed more latitude,” said Bunch. “You’re allowing him no room to manoeuvre if there’s a counter-bid.”

  “If there’s a counter-bid,” said Walker, “then I think we should consider taking it and cutting our losses.”

  Rudd looked down at the table, running the words through in his mind. He looked up and said, “In ten years I have conducted a great many negotiations for this company. Never have I introduced any loss-making factor for any unacceptable length of time. I resent the attitude being expressed in this boardroom today.”

  “It’s not personal,” said Walker at once. “The shareholders have a right to committee decisions and the protection afforded by having more than one man to make those decisions. When the vote was taken to move upon Buckland House we expected a clean, clear-cut bid. It’s proved to be anything but. It’s scrappy and unglued. Had I known it was to develop like this, I would have opposed it. As it is, I want to minimize the possibility of worsening a mistake.”

  “I’ve already assured this board that I do not consider the acquisition of Buckland House to be a mistake,” said Rudd.

  “It’s the privilege of a committee to have differing views,” said Böch.

  “Then let’s abandon the bid before we even make it,” said Rudd angrily. “The court action can still be cancelled.”

  “We’ve already decided that at this stage it would be too expensive,” said Morrison.

  “I’d like a vote,” said Rudd. He already knew the outcome but he wanted it on record. “For continuation?”

  Morrison led the voting. He was followed by Walker, Böch, Ottway and lastly Prince Faysel.

  “Against?” said Rudd. He raised his hand at the same time as Bunch.

  “The board decision is to continue,” he said formally. “To vote on the limitation of fifteen per cent above the 110p, to offer to remain for one month after the conclusion of the court hearing.”

  This time Faysel voted with Rudd and Bunch but they were still outvoted.

  “The decision is in favour of the limitations,” said Rudd.

  Perfect, thought Morrison.

  Rudd, Prince Faysel and Bunch went immediately to Rudd’s office after the board meeting. Bunch managed to remain silent until the door closed and then said, “You know what they’ve done, don’t you? They’ve made you personally responsible.”

  “Yes,” accepted Rudd. He was confused by the meeting, trying to understand it. His immediate thought was that for the first time in his life he didn’t have an escape route.

  “I’ve got an enormous amount of money committed in investment,” apologized the Arab. “I had to vote for continuation.”

  “I understood,” assured Rudd.

  “Do you think you’ll be able to pull it off with these limitations?” asked Bunch.

  “I don’t know,” said Rudd. “You haven’t told me about Washington.”

  “Jeplow is raving about the bearer cheque: says it’s a direct breach of the agreement he had with you. There’s no real problem with the legislation.”

  “What did you say?”

  “That we favoured mutual trust: we trusted him and he should trust us.”

  “I like that,” said Rudd.

  “He didn’t.”

  “There’s fuck all he can do about it.”

  “He didn’t like that either.”

  “For the sort of the money he’s getting, he’ll have to learn to like it. He shouldn’t have tried to screw us in the first place.”

  “When do you want to go back?”

  “Right away,” decided Rudd. “We can take advantage of a night flight and be back in London in the morning. I’ve scheduled the formation meeting of the liner board for the following day.”

  “What about Morrison?”

  “He’s flying over tomorrow,” said Rudd.

  He was stabbing the point of a letter-knife into his blotter. “There was a surprise at yesterday’s meeting,” he said. “Almost all the small investors sided with Buckland.”

  “Trust in the English establishment,” said Faysel.

  “Maybe,” said Rudd. “I wonder if that loyalty will stay, after the court hearing?”

  “The investment funds will come to us soon enough,” said Bunch.

  Reminded, Rudd said to Bunch. “According to the estimates I made at the meeting yesterday, there was also a pretty strong nominee vote for Buckland. How did you get on with identifying the holders?”

  “No luck,” said Bunch. “Anonymity is anonymity.”

  “Try again,” ordered Rudd. “I’d like to know what the groupings are.”

  * * *

  Rudd’s aircraft was circling Kennedy after take-off for the flight back to London when Herbert Morrison reached the office of the Boston lawyer. Grearson listened attentively to the instructions from the hotelier, his face tightening into a frown.

  “You want your stock pledged against any takeover?” he said.

  “Yes,” said Morrison.

  “But that doesn’t make sense, Herb. You’ll be fighting your own company.”

  “It makes perfect sense,” insisted Morrison. “But it’s got to work properly. I want you to go over and fix it personally.”

  “Go over!”

  “Make sure they know what to do.”

  “But they know what to do,” said Grearson. “It’s all been set up by letter already. They’ve just got to change the pledge.”

  “I’ll pay all the expenses, everything,” said Morrison. “Take the wife. Make a vacation out of it.”

  “A trip to Europe might be nice,” said Grearson.

  “Do it for me, Gene.”

  “All right,” agreed the lawyer.

&nbs
p; 28

  Rudd had not announced the invitation to Sir Richard Penhardy to join the board of the liner subsidiary company. The surprise showed on the faces of the others gathered in the Berridge suite when the Buckland House director entered. The flamboyant MP looked slightly ill at ease; there had only been the brief telephone call from Rudd, the moment he arrived back from America, and an agreement meeting the previous evening.

  Rudd stood to greet him and said, “I extended the invitation to Sir Richard, an invitation which I’m delighted to say he’s accepted, because I felt it would complete the balance of the board we intend. It gives Buckland House two voices.”

  “Excellent idea,” said Buckland at once.

  “I’m delighted to be with you,” said Penhardy.

  Rudd resumed his place at the head of the conference table and said officially, “This is a formation meeting of a company to be a subsidiary of Best Rest to operate a fleet of seven lines from whatever parts of the world that board feels will be advantageous and beneficial.” He gestured to Hallett and said, “Can we have the notice of registration and formation?”

  As the personal assistant began going through the required announcements, Rudd looked around the table. Penhardy was still looking about him trying to settle. Buckland sat alongside, all the nervousness and anxiety of the preceding days gone, slouched languidly in his chair. Prince Faysel was bent forward over the table, appearing to write something on a pad before him. At the far end of the table Morrison returned his gaze without any expression. Rudd thought his father-in-law was standing up well under the strain of Atlantic commuting. Bunch was listening intently to what Hallett was saying, professionally determined to watch for any mistake. Hallett finished by listing the full names of everyone around the table and producing their signed agreements to serve.

  “That really is the only purpose of the gathering today, but I think we can talk a little further about the intentions,” said Rudd. “Being an American company it’ll be quoted in the New York exchange. Best Rest will naturally take substantial share apportionment. I intend a Preferential issue, to which the directors will be offered purchase, and an Ordinary issue. The company will be headquartered from New York. Assets include the liners and of course the goodwill.”