The Takeover

by Stephen W. Frey

  Prescott shook his head. He was worth perhaps fifty million dollars including the partnership interest. It wasn’t anywhere near what Granville stood to lose, but it was enough. With the tax overhaul the President had announced as the major initiative for his second term, that fifty-million-dollar net worth, what he had labored a lifetime to build, would all but evaporate at his death, appropriated by the Internal Revenue Service. They were going to close all the loopholes and raise the inheritance tax rate to ninety percent on all wealth over three hundred thousand dollars. And any money flowing from personal and trust accounts to offshore accounts would be subject to withholding tax rates equal to or higher than the inheritance tax rates. He had already checked that possibility. It was insanity. But the President would get that new tax bill through Congress. Most of America didn’t come close to a net worth of three hundred thousand dollars when they died. For them, it would be a painless way to significantly reduce the deficit. For Prescott, it would be catastrophic.

  The file before him would change all of that. It would save Prescott’s perception of the American Way. He didn’t put much stock in truth and justice. His years in the judicial system had taken care of that. But a man ought to be able to pass on the wealth he had built over his lifetime to his designated heirs.

  The file contained tremendously valuable documentation that they had obtained from Jeremy Case. The information proved conclusively that senior management of Penn-Mar was well aware that toxic waste from the Wilmington plant was being sent to the site on the Parker farm in Centreville, Maryland. In fact, seventeen Penn-Mar plants across the United States and Europe were systematically sending drums of toxic waste to unauthorized sites, saving tens of millions of dollars a year in the process. Legal storage of toxic waste involved construction and the ongoing monitoring of sites set up to handle the waste. That would have totaled hundreds of millions in capital expenditures—which they were saving.

  The evidence was truly damning. Jeremy Case had given them memorandums listing the illegal sites, listing the individuals at the Penn-Mar facilities responsible for arranging the illegal disposal, and describing just how much money they were saving each year. There was even a memo from the chief operating officer to the chief executive officer outlining the COO’s concerns about continued illegal disposal. It was beautiful. Prescott couldn’t ask for a stronger case.

  The information contained in the file—the file that had been inside the package Phoenix Grey had retrieved from the strip-mall pavement in Temperance, Michigan, after killing Anwar Ali—would destroy Penn-Mar and, thereby, an administration. It was too bad that they had to kill Jeremy Case after he had provided them so much information, but it was absolutely necessary. Just as Rutherford said, sometimes people had to be sacrificed to complete the mission. There could be no clues leading back to them.

  Who had been that anonymous caller to the Bradlees that night? Prescott laughed. He had driven all the way from Baltimore to Wilmington to place that call from a phone booth outside the Penn-Mar plant. That way, when officials checked the Bradlees’ telephone records, they would see the call coming from Wilmington. He would present that bit of evidence in court. It would be thrown out as circumstantial, but it would have its effect on the jury anyway.

  He had made the call, but only after Rutherford had assured him that the two drums with Penn-Mar’s name clearly painted on the side had been buried on top of the unmarked drums already in the ground there. The people at the Wilmington plant would never know.

  Prescott laughed loudly. Rutherford was incredible. How the man accomplished some of these things, he would never know. He probably didn’t want to know. Granville had been correct to recruit Rutherford. Prescott had objected to Rutherford at first. They all had. But Granville was right. They needed him.

  Prescott had been cynical as well when Winthrop had proposed the plan to the other six of them two years ago. “The Pleiade Project” Winthrop called it—the term Pléiade originally referred to a group of seven French poets of the sixteenth century who favored the use of classical forms. But now the term referred to any group of seven brilliant persons. Granville liked that word—brilliant.

  They had all been cynical at first. Now they were all believers. They were farther than they had ever dreamed they would be. Now it was up to Boreman to bag the elephant.

  “Turner?”

  Prescott looked up quickly. “Sharon, what in the world are you still doing here? It’s after nine-thirty.” She had caught him off-guard. The Case file lay open on the desk, and he did not want her to see it.

  “I just wanted to make certain I was as prepared as possible for Monday. I hoped I might find you still here too.”

  “Beautiful night, isn’t it?” Prescott nodded toward the office window overlooking Baltimore’s now illuminated Inner Harbor.

  “Beautiful.” Sharon followed his gesture, as he knew she would.

  Quickly Prescott closed the file and allowed it to drop silently to the carpet behind his desk. “Sharon, why don’t we have ourselves a nice dinner? To celebrate the long-anticipated beginning of the trial. I think we can safely say that there is no way the other side can postpone it again at this late hour.”

  “Dinner would be very nice, Turner. But I don’t want to keep you from your wife.”

  Prescott smiled. “She’s at our summer home on Martha’s Vineyard. I’m not going this weekend because of the trial.”

  “Oh.” Sharon felt her knees go weak. “Fine.” Suddenly she was nervous. They had spent a great deal of time together over the past few months preparing for the trial, but never once had they dined together alone.

  “Good. Let me finish up a few things, and I’ll be around in a minute. We’ll go to the Brass Elephant. How is that?”

  “Great.” She hesitated momentarily. She wondered what was in the manila folder Prescott had subtly closed and pushed to the floor.

  12

  Falcon sat in the desk chair of his apartment and stared at the equipment. Barksdale had been true to his word. The men had installed everything in the apartment. Fax machine, personal computer, a Bloomberg terminal, a modem so that he could interface with the bank’s mainframe, giving him access to brokerage reports, LEXIS/NEXIS, and Lotus One Source. The bank had even arranged for a separate telephone line so that Alexis would not miss calls related to her modeling jobs. Barksdale must have a very senior level connection at New York Telephone because, as a rule, it took at least two weeks to have a line installed in the city.

  Falcon rubbed his eyes and yawned. He had worked straight through the weekend. Finally, late yesterday, Alexis had prevailed upon him to interrupt work and enjoy Sunday evening out. They had eaten at Henry’s End, an exotic out-of-the-way place in Brooklyn Heights, then walked to the Promenade to view the lights of downtown Manhattan across the East River. He barely enjoyed dinner and did not enjoy the Promenade at all. He was preoccupied. There was too much to do.

  Alexis wanted to go out afterward to a club, but Falcon nixed the idea initially. He needed to get back to work. He had lost valuable time already just by going to dinner. The first meeting with the German investment group was scheduled for the end of the week, and he was far behind. She had cried in the taxi on the way back to the Upper West Side, saying that she could not cope with his lack of attention. Now Falcon realized why he had never had a serious relationship in New York. But he also realized that he didn’t want to lose Alexis.

  So they went out despite his reluctance. And she had kept him away from the apartment until four o’clock in the morning at a hot new Argentine club, flirting and dancing with several men—the first time she had ever flirted with anyone in his presence. Finally, he had dragged her, literally kicking and screaming, from the dance floor. They had ridden home in the taxi in silence and had not spoken a word to each other since arriving at the apartment. Alexis had gone straight to the bedroom and locked the door, and he had
sprawled on the leather couch in the living room.

  His shirt, slacks, socks, and shoes lay in a crumpled mass on the floor next to the sofa. All he wore now was a pair of blue boxers. He was tired, hungover, and irritated. He rubbed his eyes again. What a great way to start the most important week of his life, a week that could ultimately be worth five million dollars.

  Suddenly, Alexis burst from the bedroom. “I’m leaving!” she announced.

  Falcon brought his hands to his face. Her voice knifed through his head like a high-powered laser. “Fine.” He was in no mood for this.

  “What do you mean, ‘Fine’?” She stopped at the door of the room, hands on hips, staring at him.

  He allowed his hands to drop from his face. She looked stunning in her tight top and short skirt. “I mean, go ahead,” Falcon said calmly. “I’ve got lots of work to do and just four days to do it. Feel free to stay out all day and most of the night too.” He gestured grandly toward the door, as if bowing before her as she entered a huge ballroom.

  “I hate that superior attitude of yours sometimes. That Falcon control.”

  He leaned back in the chair, crossed his arms, slowly raised his left eyebrow, and broke into a sarcastic grin.

  Immediately Alexis turned, picked up her pocketbook from the spindly wooden chair near the door, and hurled it at him. Falcon ducked to avoid the missile, then bolted from the chair and caught her as she attempted to rush from the apartment.

  “Get off of me!” Alexis struggled to free herself from Falcon’s grasp, but she could not. He was much too strong.

  In one motion Falcon scooped her up like a baby and threw her onto the couch. Immediately he was on top of her, holding her hands down above her head. She continued to struggle for a few moments, then stopped as it became obvious that her effort was useless.

  Their faces were inches apart. “Don’t ever flirt with another man in front of me again. Do you understand?” Falcon hissed.

  Alexis stared at him. She had never seen the fire burn this way before. “Let my hands go,” she whispered. He did and she brought them to the back of his neck. “All right. I just did it so you’d pay some attention to me and not that damn computer.” Falcon smiled, then pulled her lips to his.

  Fifteen minutes later she had gone off happily on a shopping spree, and Falcon was back at his desk. He stared at the computer. There was so much left to complete: projections, discounted cash-flow analysis, debt-capacity analysis, comparable-transaction analysis, comparable-company analysis, review of Delaware and Ohio takeover statutes, review of all relevant newspaper articles relating to the company, and a review of Penn-Mar by division to determine what, if anything, could be sold to reduce the debt on the off chance that they were successful in acquiring the company. “Damn it.” Falcon leaned against the back of the chair. He needed something for this headache.

  The cordless phone on the desk whistled obnoxiously. “Shut up,” he said, then picked up the phone and pressed the answer button. “Yeah.”

  “Andrew?”

  “Yes.”

  “It’s me, Jenny.”

  “Hi.” Falcon’s expression brightened immediately. He stood and moved to the kitchen to fix another glass of Alka-Seltzer. “It’s good to hear your voice.”

  “Thanks.” Her tone betrayed no emotion.

  Falcon let out a long breath. She was still acting “professional,” as she called it. “Lighten up, Jen. Come on. I miss the old Jenny Cagle. This one’s too formal.”

  “Sorry. It’s the only one there is. How do you want me to act?”

  “Like yourself.” Falcon dropped the tablets into cold water.

  “I thought I was.”

  It was useless, he could see that. Well, the hell with her. The hell with everybody this morning. “What do you want?” He became curt, something he had never before been with her. Perhaps that would elicit a reaction.

  “I have a couple of messages for you.” The edge in her voice became more noticeable.

  Falcon drank the entire glass of fizzing liquid in one gulp. So she could be stubborn. That made two of them. “Who called?”

  “Gill Raines from Goodyear and Helen Dragas from H. J. Heinz. Do you need their numbers?”

  “No. Look, Jenny…”

  “Good-bye, Falcon. I’ll let you know if anything important comes up.”

  “Jenny!” The line clicked in Falcon’s ear. “Jesus Christ, that’s all I need now.” He replaced the phone slowly, fighting the urge to slam it down. Suddenly he realized that it was the first time Jenny had ever called him Falcon. So she didn’t consider him a friend anymore. Well, good for her. Alexis was mad at him and so was Jenny. They’d both get over it in time.

  The telephone whistled again almost immediately.

  “Yes, Jenny,” he said in a patronizing tone.

  “Falcon?”

  “Yes?”

  “It’s Barksdale.”

  “Oh. Sorry.”

  Barksdale ignored the apology. “I hope all that expensive computer equipment is hard at work. What do you have for me? How much can we pay for Penn-Mar?”

  Falcon breathed deeply. “The thing is worth sixty dollars a share…sixty-five tops.”

  “We won’t win with a bid that low. DuPont or Hoechst will come into the bidding process at those prices. We have to pay more.”

  Oh, so now he was an M&A expert, Falcon thought. “It isn’t worth any more than that. At least not according to what I can tell from all of the public information I’ve gathered. Look, why don’t we try to contact senior management at Penn-Mar? Maybe there is more value than sixty dollars a share. Maybe they’ve got a new product or a new process that will significantly boost revenues. Or maybe they’ve got some land on the balance sheet well below market value. A conversation with senior management might get me to a higher offer price.”

  “They won’t meet with us.” There was impatience in Barksdale’s voice.

  “You don’t know that. They might be very happy to meet with us if you really think DuPont or Hoechst is going to jump into the fray. Penn-Mar’s senior management shouldn’t want to see either of those two companies win a bidding war. Those companies already know the chemicals business. The first thing they will do is kick out Penn-Mar’s senior people to save a good bit of money. We, on the other hand, need them. We don’t know anything about chemicals.”

  “In fact, we do know a good bit about the chemical industry. By that I mean the Germans and their representatives do. Besides, Penn-Mar probably has all kinds of golden parachutes and rabbi trusts in place to protect those guys in case of a hostile takeover. They’d be only too happy to see the price go higher to make their stock options worth more.” Barksdale was throwing out a couple of terms he’d heard at a cocktail party, as if he really knew a thing about M&A.

  “Penn-Mar doesn’t have anything like that in place. A shareholder rights group got them to rescind all of that last year,” Falcon said, slamming Barksdale’s little foray into the game.

  “I don’t care.” Now Barksdale was on the defensive and he became authoritative. He was vice chairman and Falcon was just a vice president. “We’re not going to contact them before we announce our offer to purchase. It would give them time to find another bidder. Maybe another buyout group that would give them all kinds of incentives and options we’re not willing to give. I don’t want to give them any more time than I have to.”

  “Phil, if we pay more than sixty dollars a share, the equity people in the buyout couldn’t expect to receive more than a twenty to twenty-five percent annual return, and that’s optimistic. Equity players usually need forty to fifty percent a year. It would hurt our credibility in the—”

  “Falcon, we’re going to pay seventy-five dollars a share.”

  “What?”

  “Seventy-five a share. You said it yourself last week when we f
irst discussed this thing. We can’t win unless we pay seventy-five a share.”

  “That was before I knew what a dog this thing is. I can’t in good faith recommend seventy-five a—”

  “That’s what we’re paying, damn it.”

  “Why not start out at sixty? It’s a respectable premium over the current price. Don’t give away the farm on the opening salvo.”

  “I want to bear-hug them. I want no chance that this company slips away from us.”

  Falcon could hear the stress in Barksdale’s voice, and he tried another tack. “Is Boreman driving you to this? Is he telling you the price has to be seventy-five a share? He’s the one who is friends with the Germans, right?”

  “What else have you found, Falcon?” Barksdale asked, ignoring him.

  There was going to be no further discussion on price. Falcon could either be a part of the team at seventy-five or not. It was his choice. And he wasn’t going to miss this party. No way in hell. It was his chance to get back to the big time, his chance to start an M&A group at NASO, and there was the five million they were going to pay him if the deal went through. He wanted that five million. Plus there was the added incentive of rubbing the biggest takeover in history right in Granville’s face—right under his nose. So what if Boreman and Barksdale wanted to play Russian roulette with the Federal Reserve? That was their business, as long as he got his five million and had time to put it into J. P. Morgan or one of the Swiss banks. And what the hell? What was he worried so much about seventy-five dollars a share for anyway? Maybe the Germans knew more about Penn-Mar than he did. Maybe they had inside information. It wouldn’t surprise him at all.

  “What else have I found? Let’s see. Penn-Mar is headquartered in Ohio, but it’s incorporated in Delaware, as many of the Fortune 500 are. If Penn-Mar’s board does not embrace our offer, if the offer is hostile in other words, we’ll have to get at least eighty-five percent of the stock in the initial tender or the Germans won’t be able to touch Penn-Mar for three years.”