Read Barbarians at the Gate Online
Authors: Bryan Burrough,John Helyar
Barbarians at the Gate (74 page)
Either the committee’s recommendation was being delayed, Johnson reasoned, or it wasn’t making one altogether. That meant one of two things: The bids were too close to call or there was no winner. Johnson and the Robinsons debated the factors that could have gummed up the works, including the strange First Boston bid and the remote chance the committee had thrown out all bids in favor of a restructuring.
“Something is very, very peculiar,” Johnson said. But whatever the reason for the delay, he told the Robinsons, “this is bad news for us.”
Linda Robinson passed on the news to Cohen, who was home alone at his Manhattan apartment while his wife visited friends in Florida. Despite Johnson’s pessimism, the group at the Robinson farm remained optimistic. It was premature, they agreed, to draw ironclad conclusions from news of the board’s flight schedules.
After dinner a beaming Linda Robinson brought out her husband’s birthday cake, which she had designed herself. A carrot cake with white frosting, it was decked with Oreos; graham crackers; and honey, cinnamon, and chocolate Teddy Grahams, Nabisco’s popular new cookie. But the
pièce de résistance
was the candles, or what at first glance appeared to be candles. On closer inspection one could see they were actually Winston and Salem cigarettes, each merrily lit atop the cake and wafting curls of smoke.
By the time Hugel brought the committee to order Sunday morning at a quarter past ten, everyone in the conference room knew what had to be done. Matt Rosen’s tax opinion meant they couldn’t ignore the First Boston proposal and its promise of a bid as high as $118 a share. In order to give Maher’s troops time to firm it up, a second round of the auction would be declared. All bids, including the management group’s winning $100 offer, would be thrown out.
Atkins and Mitchell had made the final decision Saturday afternoon after Rosen’s conversation with Finn. Not everyone was happy about it: Fritz Hobbs of Dillon Read thought Maher’s proposal was harebrained and said so. But as always, no one was willing to argue too strongly with the lawyers, not with lawsuits hanging over their heads. If Atkins needed any further convincing, Beattie’s angry letter had given it to him. Several of his colleagues expressed quiet relief that, by forcing a second round, the First Boston proposal allowed them to evade a legal challenge from Kravis.
Charlie Hugel wasn’t pleased with the idea of a second round, either. The First Boston proposal was iffy at best, and he remained convinced Johnson would team up with Kravis. “If we extend,” Hugel said, “and First Boston drops out, these guys get together and then what have we got? We’re back to ninety-three.”
Hugel drew a sharp rebuttal from Marty Davis. It was in the board’s best interest to draw this contest out, Davis argued: Make the bidders sweat, drive them into a competitive frenzy, buy time to work on the restructuring option.
The issue had already touched off one conflict between the two men. Davis was furious Thursday afternoon when he saw a statement from Hugel on the Reuters financial wire, to the effect that the Friday bidding deadline was firm and there would be no extensions. Davis immediately dialed Hugel. “What the hell is this about on Reuters?” he stormed, then read him the item. “That isn’t our view; that isn’t right.”
“I didn’t say that,” Hugel maintained.
Davis didn’t believe him. He thought Hugel was a babe in the woods or a pawn for Johnson. Maybe both. Marty Davis was, assuredly, neither. He was now a leading special-committee hawk, advocating whatever it took to get top dollar and cutting no slack for the management group. He had been prepared to argue that Beattie’s letter alone was grounds to extend the auction.
The directors agreed without much debate: Extending the auction was
a risk they would have to take. Rosen was trotted out to give an explanation of the tax factors. The matter of his friendship with Brian Finn wasn’t mentioned.
*
Hugel and the other directors questioned Rosen thoroughly but, in the end, went along with his advice. No matter how much they wanted to get this over with, it looked as if they weren’t yet finished. Before adjourning at one o’clock, Atkins left the room to see how much time Maher would need.
By Saturday evening Maher had relaxed. From the tone of Atkins’s questions, he could tell First Boston had somehow gotten its foot in the door. He wasn’t surprised when Atkins called again Sunday morning.
The board is prepared to give you a crack at this if you’re ready, Atkins said. “Are you prepared to dedicate the resources here, Jim?” he asked. “And how much time would you need?”
Maher wanted two weeks but knew he couldn’t get it. Atkins suggested extending the bidding deadline to a week from Monday, just eight days away. Maher, mindful that the upcoming Thanksgiving holiday might make it difficult to get funding commitments, suggested a ten-day extension, instead. Okay, Atkins said. Tuesday, November 29, at five o’clock it would be.
When he put down the receiver, Maher smiled and thought to himself:
I’ll show you Mickey Mouse.
On Sunday morning Jerry Seslowe was reading the Sunday papers at his Long Island home, trying to take his mind off the goings-on at Skadden Arps. A driving rainstorm outside made him glad to stay in.
The phone rang. It was Scott Lindsay, one of Maher’s aides. “Peter Atkins wants you to come in and sign a confidentiality agreement. We’ve got our foot in the door!”
Exultant, Seslowe wasted no time in climbing into his BMW 325ii and plunging into the flooded streets. An hour later he met Brian Finn at Skadden Arps, where he found Atkins’s mood matched the stormy weather.
The lawyer was downright hostile. Seslowe felt he was being blamed for having to extend the auction and complicating Atkins’s mission. It was
evident Atkins was dead tired and wanted to go home. He must have been up seventy-two hours straight, Seslowe thought. In a corner, Atkins’s assistant Mike Gizang looked like a rag doll.
“All right, you’re in the deal now,” Atkins lectured. “We’re taking you seriously. Okay? What we don’t want to see is another Forstmann Little. They made a lot of noise but never came to the table. We’re counting on you, by letting you in, to be real.”
Seslowe nodded. They would be real.
“Sign this.” Atkins put a confidentiality agreement before Seslowe.
“I can’t sign anything without a lawyer reviewing it first,” the accountant said.
“Fine,” Atkins said abruptly. “I’m leaving.”
“I can’t sign,” Seslowe protested. “I can’t.”
“You have to sign.”
Seslowe pleaded to be permitted to fax a copy of the agreement to Pritzker’s lawyer, Hank Handelsman, in Chicago. Atkins made it clear he should hurry.
Soon Handelsman was on the phone, requesting changes in the document. Seslowe, eyeing a stern-faced Atkins, cut him off. “Hank, let’s talk real world here,” he said. “We either sign this right now, or we go home…. No, Hank, now. You’ve got three seconds. Peter Atkins is standing right here. We have to sign.”
By noon a group had gathered at Kravis’s offices. There was nothing to do but wait. Most of the bankers and lawyers assembled in a conference room and cheered on the New York Jets in a game against Buffalo. Someone made popcorn and passed it around. Peter Ackerman of Drexel, who had returned to New York shortly after landing in Los Angeles, stepped out and brought back an armload of books. Kravis spent the day pacing his office.
“When are we going to hear something?” he kept asking. “Goddamn it, when are we going to hear something?”
From time to time Paul Raether called Dick Beattie, who remained at home, trying to lose himself in a copy of Richard Rhodes’s
The Making of the Atomic Bomb.
“What’s going on?” Raether asked.
“I don’t know,” Beattie said. “What do you want me to do, call over there?”
“No, don’t call ’em,” Raether said. The last thing they wanted to do was be pests.
At the Robinson farm Johnson’s day of decision wore on. He was the only one of the four friends who didn’t seem obsessed by the committee’s deliberations. For much of the day he sat on a sofa reading newspapers. As the afternoon dragged along with no news, Johnson maintained his cheery facade, even as Linda Robinson nervously threw out calls seeking signs of the auction’s outcome.
“Don’t worry, Linda,” he admonished his hostess. “Eventually they gotta tell us.”
But to himself, Johnson was growing pessimistic. The board meeting’s cancellation weighed heavy on his mind. On that news alone, it seemed likely there wouldn’t be a clear resolution of the bidding, at least not today. He guessed the bidding must be in a dead heat; given all the publicity over the management agreement, that was bad news.
“If the bids are close,” he predicted, “we’re dead. The board won’t vote for us.”
Around four o’clock the two couples prepared to return to New York. Outside, a heavy rainstorm raged. The weather was so bad that the helicopter they were to take back to the city was grounded. As the rain continued, everyone piled into two cars, the Robinsons in front with a driver. John Martin had come up that day in his white Range Rover, and the Johnsons joined him for the drive back.
The tiny caravan made slow progress as the weather brought traffic to a crawl on the Hutchinson Parkway. In the lead car, Linda clutched a cellular phone to her ear, still plying her sources. As the cars crossed the New York state line, the phone bleated. It was a reporter with a copy of a press release about to be issued by the committee. Linda Robinson listened with growing incredulity as she was read the release. Minutes later she put the phone down and turned to her husband.
