Takeover Read online

  It had taken almost six months of talks with international lawyers and then Islamic legal experts for Rudd to evolve the scheme. It was thick with legal jargon and Arabic terms like modaraba for contract and modareb for managing trustee, but quite simply it consisted of a profit-sharing arrangement. Instead of purchasing shares in the normal way, Faysel and the investment trust committed their money for management within the Best Rest group: while interest was forbidden, enjoying profit from someone else’s successful management was not. In their five-year association, Rudd had never caused the Arabs a loss.

  “The board will expect to hear something about the stockholders’ report,” warned Hallett.

  “Let’s go and tell them,” said Rudd, rising.

  Hallett held back, following Rudd into the, boardroom. Like Rudd’s office it was an uncluttered, functional workplace, just a table and chairs, with a smaller table for Hallett and the secretariat. It was adjacent to the chairman’s office, retaining a view of the river but with a fuller expanse of uptown Manhattan: there was a nicotine stain of smog building up on the skyline.

  As Rudd had anticipated, Morrison’s chair was still empty. Prince Tewfik Faysel was placed to Rudd’s immediate right. Next to him sat Walter Bunch. Rudd had roomed with Bunch, just off the campus as Boston University, before setting up home with Angela, when he was studying accountancy and Bunch international law. Bunch had been the best man at the wedding, the person they’d gone to beach cook-outs with and who had promised to look after Angela when Morrison pulled the trick which had separated them almost immediately after the ceremony. And he had always been there, ready to help, after Angela’s death.

  Bunch was a polish-faced, smiling man of quick, impatient movements and untiring enthusiasm. He still wore his hair in a college boy crewcut and the business suits seem restrictive. Bunch was a man for jeans, sweatshirt and loafers, and skateboards and frisbys with the kids. There were two, at boarding school in the Hamptons. Bringing Bunch into the company had been Rudd’s first positive demonstration of strength when he gained control of Best Rest. Morrison had opposed, automatically, and been supported by the rest of the directors. Rudd had only narrowly avoided defeat. With the exception of Morrison, the others had had to admit their opposition wrong. Bunch had been the lawyer involved in every negotiation during their expansion, sharing with Rudd the success of their development.

  Next to the lawyer sat Patrick Walker. Like Morrison, the ancestry was Irish. The two men had started out together with a saloon on the Boston harbour-front just off Atlantic Avenue, Morrison serving and Walker doing the books in between the ordering. Officially Walker controlled them still, as company secretary, although the work was now done by an industry of accountants and lawyers two floors below. He was a red-faced, wire-haired man who looked at least ten years younger than his sixty-seven years. He wore widely cut suits of a thick cloth that had been fashionable twenty years earlier and he had remained unaffected by the half bottle of Irish whiskey that was his rumoured daily consumption. Rudd suspected it was more.

  Further around the table was Eric Böch. An immigrant from Nazi Germany, Böch was the only survivor of the original Best Rest board apart from Morrison and Walker. He was a fat, indulged man who smoked cigars from stumpy holders and wore diamond rings on the little fingers of each hand. He was as interested as the Irishman in profits, but for different reasons. Böch’s concern was to maintain his lifestyle of company limousines and company planes and suites in any one of the company hotels throughout the holiday resorts of the Caribbean, Mexico or Hawaii.

  Harvey Ottway was the seventh member of the board. He was a thin, disordered man, of sharp, uncertain smiles, anxious never to offend or misunderstand. He had the habit of listening to whoever was talking to him half turned, as if he were hard of hearing, head nodding every so often in gestures of assent. He had been president of Belle Air and had parlayed his position on the board as part of the takeover deal, three years earlier, which had given Best Rest their own airline to service their holiday complexes from New York, Chicago and Los Angeles.

  With the exception of Morrison, a pliable, acquiescent board, thought Rudd, looking round the table. As this impression came to him, the door from the outer office opened and Herbert Morrison thrust in. If the shuttle from Boston had been on schedule, Rudd knew the man would have told the driver to take his time, to enable him to make an entry like this.

  “Sorry I’m late. Got stacked over La Guardia and then caught in the traffic on the bridge.” The apology was to the rest of the board, not to Rudd.

  Herbert Morrison was an overpowering man, more than six feet tall, bull-shouldered and large-handed, his age suggested not by the greyness of his hair but by his once bright red hair fading to sandy-grey. It was easier to imagine him as a tavern keeper, shirt-sleeved and aproned, with pitchers of beer splayed from either hand, than as the president of a world-wide hotel chain. Which he’d never wanted to be, remembered Rudd. At the time Angela’s death projected Rudd into boardroom power, Best Rest had five motels in and around Boston and two on the outskirts of New York, near the airport at Newark. And Morrison had been content, a paper millionaire with a business small enough for individual control and with no ambition to be publicly known beyond his own home town. His apprehension about over-extending the business and causing its collapse had been another reason, to go with all the rest, for the initial hostility. Even with the overwhelming success of the past ten years Rudd still suspected that Morrison was unhappy at their size and diversification.

  “We waited,” said Rudd.

  His father-in-law looked at him directly for the first time. He gave an indeterminate nod of his head and seated himself at the far end of the table. After so long it was ridiculous that animosity should still exist between them, thought Rudd, as Hallett circulated files to each director. Maybe he should attempt to do something about it. He hadn’t made the effort for several years.

  He formally opened the meeting and invited acceptance of the minutes of the previous gathering. Böch formerly proposed and Bunch seconded. Rudd decided to concentrate first upon the outline of the stockholders’ report and leave that morning’s meeting in Washington until last.

  “The previous year has been one of consistent and increasing profit,” he began. There was a satisfied stir from Böch and Walker.

  “Our declared pre-tax profit on the current year’s workings will be $123,000,000 .…” Rudd hesitated, “and that will enable a full dividend, ten per cent commitment to reserves, and I would imagine that the announcement of such a profit will have the inevitable affect upon our stock quotations. I would expect a rise of two or three points.”

  Rudd turned to the individual divisions.

  “The airline is still insufficiently viable,” he said, conscious of Ottway’s head twitching towards him. “During the past year there have been substantial increases in fuel costs and increased landing charges at most airports. There’s also serious cut-priced competition with the larger airlines. To combat this I am suggesting that in the coming year we move further away from direct airline competition and use the fleet for the purpose for which it was originally intended, the conveyor link between mainland America to the Caribbean, Mexico and Hawaii for our leisure complexes there. I propose our travel agencies concentrate more upon the complete package, with an all-in price to include the air fare as part of the vacation package.”

  “The figures seem to justify the proposal,” said Walker, head bent over the balance sheet. “Belle Air is showing a loss of $350,000.”

  “As such, it’s a small deficit,” said Rudd. “But it’s never been a practice of this corporation to accept any loss as inevitable.”

  “It will make our vacation packages appear dearer than any other,” protested Morrison. “I don’t think we should do it.”

  Rudd thought it was an ill-considered protest and was surprised. He said, “Not if the presentation is correct. I’ve had average statistics prepared: they show that
during the past year our aircraft flew half full. At times it was considerably less than half capacity. An empty seat is a dead seat: we still have our fuel costs and our landing costs and our depreciation and crew expenditure. If we link our aircraft seats with our vacations we can undercut by at least thirty per cent even the advance bookable flights from anywhere in America to any of our resorts. And come in at least fifteen per cent below any comparable vacation outlet who have to sub-lease their aircraft seating on planes they don’t own. If the comparisons were properly set out – I’ve already asked the advertising division to prepare a presentation – then I think we’d actually gain rather than lose appeal. People could read at a glance the savings they would make, flying with us. And if they fly with us, then they vacation with us; one complements the other.”

  Morrison flushed at the unarguable logic.

  “I think the proposal sound. I formally recommend its acceptance,” said Faysel. The Arab had a soft, occasionally sibilantblurred voice, the English perfect after three years at the Harvard Business School, across the Charles river in Cambridge from the university Rudd had attended during a different period. Faysel was a member of the ruling Saudi family, with access to unlimited wealth, and Rudd knew from their own accountants that during their association the man had earned $3,000,000 in commission from his country’s investment agency.

  Faysel used his wealth, but he stopped short of hedonism. There was a string of ponies at the Epsom estate in England because he played polo at Smith’s Lawn in Windsor. And the thirty-six-foot ocean racer at Rhode Island was not a playboy’s toy but a yacht that he could navigate and captain, to championship level if business demands hadn’t limited the time available. The tailoring was Italian, the shoes English. When the Best Rest company aircraft was unavailable, he had call upon whatever executive aircraft was available from the Royal Saudi Airlines. Rudd, who had no hobbies and considered vacations things he provided for other people, not for himself, envied the Arab his enjoyment of life.

  “Seconded,” said Bunch.

  “I think it should be considered for a trial period,” said Morrison stubbornly.

  “Is that an amendment?” Rudd asked the president.

  Morrison shook his head, aware that he lacked support. “An observation,” he said.

  “We can reverse, if it proves uneconomical,” said Bunch.

  “Let’s vote,” said Rudd briskly. When the count came, Morrison voted with the rest, making it unanimous.

  Rudd turned to Faysel. “The Middle East division, under the indirect guidance of our colleague, has shown consistent profit and expansion. With the opening of the Best Rest in Amman, Jordan and Muscat, our total investment there is now fifteen hotels.”

  Faysel smiled and nodded his head in acceptance of the gestures of congratulation from around the table.

  Rudd finally became impatient with the end-of-term report. “I’d like to move on to something new,” he announced. Everyone looked at him expectantly. “I think there is an opportunity for a worthwhile expansion,” said Rudd.

  “How?” The demand from Morrison was immediate.

  The attention from every director was absolute as Rudd recounted that morning’s meeting in Washington. As soon as he had finished Morrison said, “I don’t like it. I think it’s dangerous.”

  “There’s nothing dangerous about buying land,” said Rudd, anticipating the objection.

  “Jeplow is a good man to have as a friend on Capitol Hill,” said Bunch. “More influential than anyone we can rely on at the moment.”

  “How much would the total investment cost us?” demanded Morrison.

  “There can’t be any definite figures until we value the land and create a schedule,” said Rudd. “I would estimate $200,000,000, over a four-year period. I’ve made it clear we wouldn’t consider proceeding until we had either fixed term or roll-up loans. With our profitability it would make tax sense to commit ourselves to further investment.”

  “Where’s the money coming from?” asked Morrison at once.

  Rudd turned to Faysel. “I intend to structure it in a way that would have little direct effect upon Best Rest accounts,” he said. “Under our contract terms with the Saudi investment trust, their cash infusion into this organization has to have positive commitment. My proposal is that it be designated to this project.…” He looked again at Faysel. “What investment were you considering?”

  “I would expect $30,000,000 this year,” said the Arab.

  “My intention is that no loans should be raised immediately,” said Rudd. “We can commit the Saudi investment as initial capital for land purchase, and not consider borrowing until much later.”

  “What happens if our profitability dips?” said Morrison.

  Again Rudd was prepared. “Over the preceding five years our profitability has averaged a yearly increase of fifteen per cent. This year it’s eighteen. It’s inconceivable that there would be a reversal as large as that. We have an in-house audit every three months, adjusting our forecasts, so there would be early warning if there was an about turn. I would not recommend proceeding unless we have tax lay-offs to cushion just such a risk. And any loss would be taxable.”

  Morrison frowned at another door being closed in his face.

  “I think we should consider three hotels and agree the five if the terms are right,” said Böch.

  “Sites are to be Dallas, Houston and Corpus Christi,” said Rudd. “They’re all boom towns. On the most modest forecast we’d run on seventy-five per cent occupancy. That would return us a fifteen per cent profit from the second year of operation, rising to twenty-five within three.”

  “Seems a good deal,” said Walker.

  “An excellent vehicle for our investment,” agreed Faysel.

  Morrison shifted, angered by the easy acceptance. “Why the rush?”

  “The land is being re-zoned within a month,” said Rudd.

  “It means moving without being fully covered on everything else,” protested the older man.

  “What’s the risk?” said Rudd, picking up the point that had come earlier that day from the Washington meeting. “If we didn’t proceed with the development we’d make a profit out of buying.”

  “It’s a developers’ dream,” said Ottway, gauging the majority opinion and wanting to stay with it.

  “I move,” said Böch.

  “Seconded,” said Walker at once.

  There was the slightest hesitation from Morrison and then his hand moved up, to make the vote unanimous.

  Rudd, who was punctilious about everything, arrived before the others at the Four Seasons, despite the limousine becoming traffic-blocked in 52nd Street and having to walk the last few yards. On the way to the table, past the centre-piece pool, he recognized and nodded to an investment broker sitting against a banquette and a stockbroker whom he hadn’t seen gestured anxiously to catch his attention. Rudd ordered a martini and sat with the stem of the glass held between both hands, disconcerted by the feeling that gripped him. The board meeting had been a catalogue of success, like every other that had preceded it for as long as he could remember; he doubted when the Wall Street analysis was made whether any other corporation could show the growth rate of Best Rest. And he was about to embark upon another expansion with an edge that meant a profit was guaranteed. So why did he feel so flat? Rudd didn’t like a feeling of uncertainty: he was unaccustomed to it.

  Walter Bunch arrived next, dismissing the guidance of the restaurant captain, bobbing and weaving through the tables. The man moved with college boy urgency, thought Rudd: he would have looked right carrying a football under his arm.

  “I’ve been talking to Hallett about Texas,” said the lawyer, explaining his lateness. “It’s a long-distance enquiry, telephone stuff, but at the moment it looks just the way Jeplow explained it.”

  “I’d still like you to go down right away,” said Rudd. “I want to be sure it’s safe before we actually make a purchase.” He saw Bunch smile and said,
“What’s the matter?”

  “Thought it was about time we had some of the usual caution,” said Bunch. “I got the impression at the meeting this afternoon that we were hurrying a bit, just like Morrison said.”

  Was he becoming careless? wondered Rudd. “Where’s Faysel?” he said.

  “Arranging a flight to Europe; he’s got a meeting in London,” said the lawyer. He ordered a Scotch and branch water. Rudd shook his head against another drink.

  “Mary wants us to get together,” announced Bunch.

  “What?”

  “Kids and all,” enlarged Bunch. “We’re all going up to Connecticut this weekend. Just cook-outs and beer and watching the mosquitoes zap themselves against the bug lamp. All you’d need is a pair of Levis.”

  Rudd, who normally ordered suits six at once to save fitting time, realized he didn’t possess a pair of jeans. “That would be nice,” he said.

  “You’re copping out,” accused Bunch. “Mary said I wasn’t to let you go without a positive date.”

  “Well I’m not sure.…” began Rudd but Bunch talked over him. “I am,” he said. “I checked with Hallett before I left the building. You’ve nothing fixed for this weekend.”

  “I might need to keep in touch with Jeplow about Texas,” said Rudd.

  “And you might not; all you’re doing is opening talks. We’ve telephones in every room. There’s no reason at all why you can’t come.”

  The man was right. Rudd couldn’t remember the last time there had been a weekend without some involvement with business. “Why don’t we pencil it in?” he said.

  “Why don’t we make it definite?”

  “Stop playing lawyers.”

  “Stop playing hard to get. Mary’s made up her mind.”

  “All right,” agreed Rudd.