by Ben Coes
“Morning,” Perry said as Anson walked in. They shook hands.
“Howdy,” Anson said, smiling. “How are you, Pat?”
“I’m good,” said Perry. “You want a cup of coffee?”
“Sure.”
“Black?”
“You know it.”
Perry’s office was large, immaculate. On the walls hung paintings most art history majors would recognize.
“Where is everyone?” Anson asked.
“They’re in the conference room. Your boys are in there already. Ralph Fagen from Debevoise is in there as well. The KKB folks should be along around nine thirty.”
Anson sat and took a sip from the coffee cup.
“Is Marks coming?” Anson asked.
“Marks will be there. So will Romano, their CFO. Their counsel is coming too.”
“So what are they going to say?”
“It should be pretty straightforward. KKB wants to do a deal. They want Capitana and all of that oil you’re pumping down there. They’ll probably offer some kind of cash-stock mix with a truckload of debt. They want to buy Anson Energy.”
“You know, it used to be when one company bought another and the other didn’t really want to be bought they called it a ‘hostile takeover.’ ”
“They’ll make you vice chairman. At least that’s what their bankers are telling us. All your boys’ll be protected. This isn’t a hostile takeover.”
“Vice chairman?” Anson shook his head in disgust. “I don’t want to be vice chairman. Vice chairman is when you turn sixty. Vice chairman is golf three days a week and pretending you know what’s going on the other two. I’m forty-six. Alden and I built this thing. I don’t want to be vice chairman. I don’t want to merge. I just want to run this company like I’ve always run it.”
“Well, you won’t be in charge. That’s definitely the downside. But instead of being CEO of the fifth-largest energy company in the United States, you’ll be vice chairman of the largest. For God’s sake, you’ll be creating the second-largest energy conglomerate in the world.”
“ ‘Conglomerate’? What the fuck’s a ‘conglomerate’? I’m an oilman. I’d rather pump gas than work for a ‘conglomerate.’ ”
Perry reclined in his leather chair and paused. A small grin spread across his lips as he let Anson continue his rant.
“I’m serious, Pat. You, of all people, should get it. You’ve been in this whole crazy thing from the very beginning. I had to take a Greyhound bus from Midland to our first meeting. Remember that? I don’t need to be vice whatever of the biggest energy company in the United States or the second biggest in the world. I don’t want to work for a conglomerate. I’m happy with what we’ve got, with what we’ve built.”
Perry calmly stood up. He walked to the corner of his office. On a table in the corner, he methodically opened a leather valise and pulled out a piece of paper. Finally, he turned and walked back to his desk.
“Do you know how much you’re worth?”
“Ballpark, five hundred million, plus or minus. You thieves would know better than me.”
“You’re worth seven hundred and twenty-seven million dollars based on the closing price of your stock last night.”
“So what’s the point? You guys need a loan?”
“The point is, that’s a lot of money. But almost all of it—seven hundred million dollars of it—is sitting there in Anson Energy stock. If you tried to sell any of that you’d scare the shit out of the market and your institutional shareholders, analysts on the street, hedgies, everyone.”
“You’re missing the point: I don’t care. I’m not looking to sell my stock. Anson Energy’s my best investment. Know what I did last week? I called my broker and asked him to buy me one hundred thousand shares. I have no desire to sell my stake. I don’t need a liquidity event or whatever other fancy term you bankers have for it.”
“At least listen to what they’re offering.”
“I don’t want to hear it. I’ve already made up my mind.”
“KKB is willing to pay a forty percent premium on yesterday’s closing price. Your Anson Energy equity will be worth about one point two billion dollars at the deal price they’re talking. Perhaps more important, nobody will care if you decide to take a bunch of it, all of it for that matter, off the table.”
Anson shook his head again, but a small grin emerged on his face, which he quickly tried to hide. He took another sip from his coffee cup, attempting in vain to conceal from Perry his momentary amazement.
“One point two billion dollars?” Anson said. “Great. I guess that means I can finally buy that solid gold beach house I’ve been eyeing.”
“I’m not done. They’ll grant you a one percent stake in the merged entity and another half percent you’ll be able to personally earmark to your top people. You’ll also receive warrants based on gross profit targets over the next four years. That doesn’t include salary, bonus, perks, which, as you know, will be substantial.”
“What about Alden? What will they do with him? He’s the one they should be concerned about. I’m as replaceable as a hubcap. He’s not.”
“He’ll get the same amount as you. I imagine they might try and condition the deal on his coming on board and working for KKB, or at least signing some sort of noncompete.”
“Noncompete? Right. Alden would rather give himself a circumcision with a lawn mower.”
Anson leaned back and rubbed his eyes with his right hand.
“Why us? Why not Andarko, Marathon, Conoco, or someone else for chrissakes?”
“You know the answer to that: Capitana, plain and simple. This deal is about oil.”
“There’s plenty of oil out there.”
“KKB won’t buy oil from the Middle East. Marks won’t even consider buying oil from there. They will not acquire a company if it has supply chain within OPEC.”
Anson stood and placed his coffee cup on the mahogany desk that separated the two. He walked to the window and looked out. Across the way, in the next skyscraper, he could see a group of men sitting around a large conference table. One of them, a fat, bald man, was gesticulating wildly. Anson wished he could hear what the man was saying.
“I guess it all has to do with how you look at things.”
“How so?”
“It’s never been about the money. Oh, sure, the first million was nice. But it was something altogether more important. It was about Alden and me quitting our goddamn jobs and doing something together. It was about never having to eat another bologna sandwich ever again. It was about all those people who wouldn’t let us into their world, their business schools, their country clubs.” He paused and looked at Perry. “People like you, as a matter of fact.”
Perry smiled.
“If I do this deal, I’ll be one of them,” continued Anson. “I’ll lose everything I’ve worked my whole life for. And I’m not talking about money. I’m talking about achievement.”
“You’ll be a billionaire. That’s a lot of fuck-you money. And if you don’t care about the money, think about those people in that conference room or back in Dallas. You give each of your executives a tenth of a point and all of a sudden they’re worth fifty, sixty million dollars. You say yes to this and all of a sudden you’ve made those people wealthy beyond their wildest dreams. Think of your shareholders. This one’s simply too good to walk away from.”
“All right, I’ll listen to them.” Anson turned from the window and smiled serenely at his investment banker. “I’ll listen long and hard. And I promise I won’t even say no until the end of the meeting.”
7
KKB WORLDWIDE HEADQUARTERS
FIFTH AVENUE AND FIFTY-THIRD STREET
NEW YORK CITY
Uptown, clouds shrouded Fifth Avenue’s skyscrapers in near darkness. The weatherman said the city would soon receive the biggest blizzard in a decade, but it was days away. Its foreboding precursor, the angry clouds, rushed ominously overhead against the metallic skyline.
Above the elegant entrance to the skyscraper at the corner of Fifty-third Street and Fifth Avenue, a small, stark black triangle sat affixed to the crossbeam of a titanium portico. This triangle was no bigger than a dinner plate. That stark black appurtenance was the logo of a company and this was its worldwide headquarters. The company’s name was KKB.
Inside the lobby, obsidian marble cast glimmering refractions of light from the immense chandelier that dangled in the middle of the entry space. In the center of the lobby, an abstract spread of a reclining female form in copper and mahogany designed by Henry Moore stood like some piece of modern art. Behind it, a lone security guard stood. Above his head, cut out of the same dark marble, an old railroad clock read the time: nine ten.
Seventy-four stories above, three individuals entered the elevator. One, Albert Romano, KKB’s chief financial officer, pressed the button that would send the elevator down toward the lobby. Next to him stood Tara Wheatley, KKB’s thirty-six-year-old general counsel. And to her side stood the third occupant of the elevator, Teddy Marks, KKB’s CEO.
Marks, a tall brown-haired man, was dressed in a simple, Navy blue Brooks Brothers suit, a slight grin on his face. He was a handsome man, despite a slight limp and a small scar just below his left eye, his hair just a bit too long, healthy, and youthful-looking for his age.
The elevator descended quickly and the three KKB executives walked briskly through the lobby. As they entered the cavernous lobby, Marks looked at the security guard.
“How’d your Rangers do last night, Joe?” Marks asked.
“They won, Mr. Marks,” the security guard responded, smiling. “Three zip.”
“That right?” said Marks. “I’ll be damned. Good for them.”
“Your Blackhawks lost, I’m afraid.”
“Thanks for reminding me,” said Marks, smiling.
Marks continued through the lobby, exiting the door as Romano held it open.
The black Jaguar limousine moved quickly down the FDR Drive. Marks flipped through The Wall Street Journal as Romano palmed his BlackBerry and Wheatley read through a thick legal document.
Marks had an easy, laid-back manner. His self-confidence came from a place most of his colleagues had never dreamed of, a place on the other side of the world, Vietnam, where as a twenty-year-old he had started his first of three tours of duty as a member of the Navy’s elite warriors, the SEALs. He didn’t like to talk about his time in Vietnam, but the knowledge that comes when you’ve killed with your bare hands on behalf of a cause you believe in, the humility that you earn when you yourself have nearly died for that same cause, that confidence inhabited Marks’s every step and moment, and it was an important ally in his climb to power.
Marks would have looked at home in the U.S. Senate or wherever else success has as much to do with looks and communication skills as with intellect. Marks’s rise at KKB didn’t come from his political skills, however. If anything, the opposite was true.
Marks was a young vice president in charge of business development at KKB. He was hungry and determined to rise. One day over lunch, he listened to a proposal about a hydroelectric facility on the Labrador Sea from a similarly young, hungry, idealistic engineer named Jake White. Marks researched the idea, even flying up to remote Canada on four separate occasions with White. Marks ended up championing the plan of what was now the most important asset in the KKB family of facilities, Savage Island Project.
Marks had fought KKB’s CEO at the time, a gruff old man named Emmet Winkler, who opposed the idea. In the annals of KKB history, the development of the Savage Island Project and the bad blood between the two had become legend.
At a board meeting, a member of the board of directors, Boone Pickens, had opened the company’s quarterly financial statements and, pointing to a particular line item, demanded to know why KKB had spent more than $80 million on land acquisition in northern Canada. Winkler, caught off guard by the line item and embarrassed by the perception that he hadn’t reviewed his own financial statements prior to the board meeting, turned to his then CFO, who informed the board that it had been used “to buy a large piece of desolate tundra in northern Canada in a place called the Nunavut.”
Winkler stood up and walked across the room to Marks.
“I told you to drop that fucking dam six months ago!” Winkler had yelled at Marks in front of his board.
“Well, now, this is getting interesting,” Pickens interrupted. “Would you care to explain yourself, Teddy?”
It was just the opening Marks needed. Without so much as acknowledging his boss, Marks had stood up and launched into an impromptu forty-five-minute presentation, without notes, on Savage Island Project. Cost, time line, return-on-investment analysis, everything related to the project.
“Do you want KKB to be the biggest energy company in America?” Marks had concluded his presentation. “Or are you content to stay in the backwaters of this industry? I’ll tell you right now, I’m not. There are half a dozen companies who would pay ten times what we paid for that land and the rights to this project.”
Marks’s speech left the entire boardroom silent.
Finally, after a pregnant pause, it was Pickens who spoke. “You got my vote, Teddy.”
By the end of the meeting, the $12.5 billion project had been given the green light, and Emmet Winkler had been asked to retire.
Now, two decades later, it was Marks who was CEO. KKB was the second-largest energy company in America. Marks’s prediction had come true.
But KKB was vulnerable. Savage Island Project ensured dominant market share for KKB in electricity markets throughout Canada and down the eastern seaboard of the United States. The company’s thirteen nuclear facilities were key suppliers to the developing southwest. It was a major owner and distributor of natural gas and coal throughout North America.
But KKB had misfired in its attempts to organically develop petroleum supply. Two projects in Kazakhstan had proven disastrous, costing KKB well over a billion dollars each and coming up dry except for remnant natural gas, which was not worth the cost of trying to transport it to market.
What’s more, Marks insisted KKB not buy any of its oil, not a drop, from the Middle East.
Marks was fiercely patriotic and believed Middle East oil was the devil’s water. When certain members of the KKB board pressured Marks to rethink his position and keep his political views out of the CEO suite, he threatened to resign. KKB’s resulting dependence on electricity made the company vulnerable to a takeover by one of the oil behemoths, BP and ExxonMobil especially.
It was this that had caused Marks to focus on Anson Energy. For while Anson was a smaller player in the U.S. energy business, fifth largest in the country, it had discovered oil—lots of oil. Its strike off the coast of Colombia was the talk of the petroleum world. It was the answer he was looking for.
As the black Jaguar limo made its way toward the offices of Goldman Sachs, Romano’s phone rang. As he listened, he looked at Marks, who was staring out the window.
“What’s up?” Marks asked after Romano hung up his phone.
“That was Philip,” Romano said, referring to Philip Bois, a managing director at Morgan Stanley and KKB’s chief investment banker. “Phil spoke to Pat Perry. Apparently Nicholas Anson is adamantly opposed to selling the company to us.”
“Does he want to cancel the meeting?”
“No, Phil thinks we should get together anyway. I tend to agree.”
“Has Phil previewed the deal to him?”
“He previewed it. You know Anson. He’s a dirt farmer, for chrissakes.”
“He’s not a dirt farmer,” said Marks. “He’s an entrepreneur who built a great company. He’s a classic American.”
“He got lucky,” persisted Romano.
“Maybe. Who cares? I know we didn’t think of looking for oil off the coast of Colombia. Did you have that idea?”
“No, I didn’t.”
“Well, I didn’t either. In fact, not
many people did. But Nick Anson and his brother did, didn’t they? Our goddamn overpaid E and P team was too busy pissing away two and a half billion dollars in Kazakhstan to think of looking in the friendly waters off Colombia.”
Romano sat in silence.
“If we’re going to build a great energy company, and if we’re going to do it without sourcing oil from the Middle East, Anson is our best option,” said Marks. “As for Nick Anson, I know him. Not well, but I know him. He is an honorable, hardworking, humble man. I’d be proud to have him on our team.”
“Look, we’ll succeed in a takeover of Anson,” said Romano. “We’ve done the analysis. If Nick Anson isn’t on board, then we should take our offer directly to the shareholders. We should go hostile.”
Marks shook his head. “I don’t want to do that. I won’t do that. If I can’t convince Nick Anson to join us, then we’ll find another way to get oil. Either that or KKB will have to find another man to lead the company.”
The vast conference room table on the fifty-fourth floor of Goldman Sachs didn’t look like the poker table it was. From one end to the other, it measured at least fifty feet long, its deep brown wood matched by dark paneling throughout the room. Wood enveloped you the moment you walked in, making the place feel at once secretive, important, dignified, and the center of the world—a place where important things happened.
Anson and Perry walked into the room. The small talk that occupied the individuals sitting about the table came to a stop. Anson walked to the table and looked up at a handsome, dark-haired man across from him.
“How are you, Ted?” Anson asked as he extended his hand. “What’s a nice guy like you doing in a place like this?”
Marks laughed enthusiastically. “I was going to ask you the same thing. Good to see you, Nick.”
The two men shook hands, and the serious mood that previously occupied the room broke down in the forced camaraderie of introductions.
“You know our CFO, Al Romano,” Marks said. Anson reached out and shook Romano’s hand.
“Sure, we’ve met,” said Anson. “How are you?”