Chương 91: Book 3 - Chapter 15 C

Just before April came the phone call that jeopardized everything, "Dr Cook?"

"Yes, is that you Georges?"

"Yes, I'm sorry but there's a problem."

"Tell me Georges, what could the problem be?"

"It's the Prime Minister's office. They've directed me to ensure that Renault is a part of the Euro Motor merger. Chirac's ministers see the opportunity for France to lead this new entity, and are rejecting the 5% voting limit that was established for national entities. They demand to take AMC's place in the merger." I sighed.

"And by 'lead,' they mean dominate the board and negate the stability I promised the English, German and Swedish partners, correct?"

"Precisely," Georges confirmed.

"What leverage does he think he has?" I asked.

"He's threatening to block export of parts that your AMC needs from French factories if you don't agree. He is also waving 'trade friction' and possibly banning German vehicle imports.

"The political cost of not being part of a European car giant is suddenly too high for the government to bear. They are threatening to kill the entire deal unless Renault is fully integrated with a majority vote. Mitterrand is fighting them on principal, but he is losing ground."

"This doesn't jeopardize our plan, Georges. It forces the final necessary step," I said, my voice hardening.

"Tell the President that I will call a final, emergency meeting in West Germany with the CEOs of Aston Martin, Saab, BMW, Jeep and Volvo. Tell him I will present a plan that integrates Renault—and guarantees every single French job at Flins and Douai—but only if the French government agrees to a final, irrevocable position before the meeting begins."

"What position?" Georges asked, his voice filled with hope and dread.

"Tell the President that to join Euro Motors, France must commit to the five percent restriction. I'll agree to Renault joining Euro Motors, but only if they stick to that 5%. Can he get that announced before tomorrow?" There was a pause.

"If it is the only way to save Renault and make France part of the new European auto giant, he will make it happen and steal this win from the Prime Minister."

"You also need to know that the debt that Renault brings to the table will significantly curtail its post merger valuation."

"I know John. A few years from now, it wouldn't," he said with confidence.

"But doing this now? It's a shame. I'll tell the President and get back to you," he said and hung up. I didn't wait for Georges to call back. After a few minutes I called President Mitterrand directly on his private line.

"François, I hope I'm not interrupting your dinner."

"Jean! You are never an interruption. I hear our friend, the Prime Minister, is causing you trouble." His voice was tight with frustration.

"His office is trying to torpedo the largest economic deal in Europe to score a political point and achieve a Pyrrhic victory. We both know Chirac is an asshole," I said, knowing my grudge with the man was just beginning. Mitterrand let out a tired chuckle.

"A rather large one, oui. And expensive. I am furious he has waited until the eleventh hour to make this ridiculous demand. Georges told me your solution."

"It is the only way to guarantee a free and innovative Euro Motors. I can secure French jobs, integrate Renault and you get to poison the ambition your rival preaches about. You guarantee the rules the merger happens under and I guarantee that the loss of Renault wounds him deeply. The backlash will steal his thunder after you save the deal. But you need to cut his feet out from under him and quickly. The moment you use your external authority to agree, he can't pull back.

He has to go through with a smile on his face, even when he sees the valuation of a debt loaded Renault."

"It is politically ingenious, and it ensures France joins the merger. I've thought constantly about it since you first mentioned it. I was disappointed that we weren't strong enough to be a true giant. Europe has become too integrated now to not be a part of this.

"It will be done, Jean. The decree will be ready before you land in Germany. Tell your Swedish and German friends that France's commitment is ironclad, and we will abide by the voting limits. Send them my personal regards."

"Thank you, Mr President. You've saved the merger."

"No, Jean. You have saved my political reputation and given a gift to France and Europe. Go, make your deal happen." I flew to West Germany and held a meeting with the primaries of the companies there.

"Gentleman, you've all met me. You understand that I want to see a strong combined Euro Motors that ships millions of high quality cars to the United States and the rest of the world every year," I told them.

"Yes, but we understand that Renault wants to be part of the merger now, but everyone here rejects French government ownership," Dick Teague said.

"I'm not going back to that, John." I decided to clear the air with a simple question.

"Would you rather have Renault as a partner than me? They are offering to take the place of AMC in the merger. I can make a success of AMC Jeep and Aston Martin on my own if I need to."

"No, we want you and AMC. With your access to American markets and dealerships we can take America by storm," Pehr Gyllenhammar said.

"Our governments would never allow it," Georg Karnsund of Saab said.

"I would never allow it."

"Better an American partner than a French one," said Dr Eberhard von Kuenheim of BMW.

"Well gentleman, thank you for the support," I told them giving a grin to Dick and Victor.

"There is only one solution to the problem. We have a limit in the company charter that no single government may vote more than five percent of the stock, no matter how much they own."

"That is the solution we formed at the beginning. Let's vote on it again to confirm that our stand has not changed," Pehr Gyllenhammar suggested. The vote passed unanimously.

"Now we have to decide if we allow Renault to join the merger under the conditions we set, not theirs," Dick Teague said with a malicious grin.

"What do you think Dr Cook?"

"If we can remove government control of Renault, then it is an acceptable partner. I highly respect the CEO Georges Besse. He has skills that would greatly improve the speed in which the merger brings everyone together under one roof."

"Yes, it can't be done without removing government control of Renault," Dr von Kuenheim reiterated to a room full of agreement.

"Georges Besse is waiting outside, perhaps we should bring him in to discuss our decision?" I asked.

"Yes, bring him in," it was agreed.

"Welcome Georges," I told him, and introduced everyone, even though he had met them all before.

"Thank you for giving me your time, I'd like to start by sharing some information I was given just before leaving Paris," Georges said.

"Go ahead," I instructed Georges.

"The French President has decided that to join the merger and creation of Euro Motors, he will liquidate all the holdings in Renault to Euro Motors except a sufficient amount to ensure that existing manufacturing plants in France do not close." I grinned at the announcement, and asked him, "And what is the percentage that the government of France believes is necessary to prevent plant closure?" He smiled and said, "Five percent of Euro Motors." The room broke out into laughter and applause.

It was prearranged, but it was an incredibly high-stakes gamble on the French government's compliance. Georges simply winked, confirming that he had delivered on his end of our private deal.

"There is one concern Dr Cook," Pehr Gyllenhammar said.

"We've been reviewing the debt that AMC carries. It's a significant liability and will greatly reduce your participation in the new company." The story has been illicitly taken; should you find it on Amazon, report the infringement.

"I guess you haven't heard?" I asked. They looked like they hadn't. Dick Teague looked smug, and couldn't wait to break the news to the room.

"Billionaire Boy retired the corporate debt and made a Tender Offer for the rest of the company! It's all debt free and his now," he said with glee. I nodded.

"He's right," I said. I had used up more of my war chest, but I had done it at a 40% discount. From there it was the nitty gritty calculations of debts, assets, and final percentages. The final value of Euro Motors was calculated after various debts to be worth $5. 03 billion. AMC got 35. 8 percent of the new company which I took. My 75 percent of Aston Martin got me an additional 0. 75 percent. The French government, owners of Renault, got 5. 5 percent after subtracting the debt.

BMW got the second largest piece at 33. 8 percent. The Quandt family happily took half of that, the rest was distributed to the remaining BMW shareholders. Volvo AB now held 17. 9 percent of Euro Motors. Even though it wasn't big it had been having a few good years, and had more dealerships in the US. Their auto division had been valued at $900 million. Saab-Scania had similarly exchanged the wholly owned Saab automotive division for $350 million worth of shares in Euro Motors, a 7 percent stake.

They would still make trucks and airplanes. They, like Volvo, were now out of the car business. Victor Gauntlet's 25 percent stake of Aston Martin was worth a quarter of a percent of Euro Motors. He was thrilled more by his access to technology than the change of where his investment lay. He was eyeing BMW's V12 as the solution to my 16th birthday deadline. The government of France discovered after the debt calculation they only had 5. 5% of the new company.

Chirac was furious, and blocked the sale of any of the Euro Motor holdings, even though they could only vote 5%. With my vote as the largest individual shareholder and backed by my praise of Georges Besse he was made CEO of the unified company. The work that Dick Teague had put into the design and parts synergy as author of the 'Cook Plan' meant he was designer in chief. I was on the board, and had enough votes to chair it if I wanted. I declined, I was happy enough that I had turned my investment into 35.

8% of a more than 5 billion dollar car company when we were finished, having spent less than $750 million to do so. The market was enthusiastic and it was expected to climb much higher. It was also an asset I'd eventually need to mortgage.

The signing of the Euro Motors charter on April 18th sent shockwaves through the financial world. Immediately following the ceremony in Bonn, West Germany, I was escorted to a small broadcast booth for an interview with an American news crew. The reporter waiting was Bernard Kalb of NBC News, a seasoned correspondent.

"Dr Cook, thank you for joining us," Mr Kalb began, tapping the microphone on his lapel. He didn't smile much, but his eyes were sharp.

"At just ten years old, you've become the architect and largest individual shareholder of the fourth largest car company in the world. How does that feel?" I adjusted the lapels of my new suit, which I was still getting used to.

"It feels like a very good day for European industry, Mr Kalb. And a good day for American and Canadian jobs at Jeep and Eagle too."

"You used an immense amount of personal capital to make this happen," Mr Kalb continued, leaning forward.

"Was that a daunting risk for a ten-year-old investor?"

"The risk was not in the investment, the risk was in not doing it. BMW, Volvo, Saab, Aston Martin and Jeep/Eagle, they are great companies. They just needed a single framework to share technology and resources. That is what this merger provided." I paused, remembering the history I had studied for this event.

"You know, this date, April 18th, it has a special meaning for Europe. Back in 1951, on this very day, six nations signed the treaty creating the European Coal and Steel Community." Mr Kalb nodded, appreciative.

"The first step toward what is now the Common Market."

"Exactly. And what we did today, creating Euro Motors, it's a small-scale model for the new, modern Europe that I believe is coming. A political union built on prosperity and shared ambition," I said, trying to be as convincing as I had been with Mitterrand.

"The European Community is working toward a single market by 1992. I am positive that this merger, uniting French, German, Swedish, English and North American ingenuity, is a template for the prosperity they are going to find on a grand scale. We have proven that these nations can work together for a common economic goal, and in the process everyone wins."

"That's a powerful statement. You mentioned American jobs. Renault's exit and your takeover of AMC was not quiet. The media coined the phrase 'Billionaire Boy' as you swept out the French management. Dick Teague called it 'D-Day all over again,'" Mr Kalb noted, keeping his expression neutral.

"How do you reconcile that aggressive move with your message of European unity?"

"Mr Teague's passion is for the American brand, Jeep, which was his life's work. Even if it was a bit of a malapropism, the thought is what counts. Dick knows cars. He's personally responsible for the nitty gritty details that the media called the 'Cook Plan.'

"My job was to save AMC and Jeep for him. The previous management was steering the company into bankruptcy. I didn't fire anyone I didn't have to," I explained, maintaining eye contact.

"I guaranteed that every single French factory worker job at Renault would be protected, and that was a key part of the final plan. I made the same guarantee to Dick Teague for AMC, and PG at Volvo."

"One final question, Dr Cook. You've earned a French honorary citizenship and a Swedish one as well, but you're still an American citizen, correct?"

"That is correct. I am a citizen of the United States."

"As the man who now sits on the board of a massive, pan-European industrial venture, I must ask: What are your next priorities for Euro Motors now that the ink is dry on the deal?"

"I'll do what every great investor does. Trust the team. They have the framework, the funds and the ambition. I only had one personal request, and that was when I acquired 75 percent of Aston Martin. I want an all new V12 Aston Martin for my 16th birthday, the next generation of the iconic supercar. I have full confidence I'll have it well before the time is up."

"A V12 Aston Martin for your sixteenth birthday! That is quite a down payment, Dr Cook," Mr Kalb said, allowing a thin, surprised smile.

"Bernard Kalb, NBC News, reporting from Bonn, West Germany. Thank you, Dr Cook." I stood up, shaking his hand firmly.

"Thank you, Mr Kalb. It was a pleasure." My security team immediately ushered me out of the broadcast booth. The interviews continued for a few hours, but I was exhausted. I was glad to be done talking about it, and ready to get on a plane for my flight home. The shockwaves were sent. Now the real work of building Euro Motors began. There were cartoons about me in the newspapers. My favorite one showed me in cowboy hat and French peasants from Les Miserables cowering before me as I shouted "You're Fired!"

In the US, the AMC Jeep, BMW, Volvo, Saab and Renault dealerships rejoiced as they were all given the option of expanding to cover cars from every company. The existing dealerships in the US totaled less than 2, 500. Dick had the job to increase that. He dug into the engineering instead, and found someone who could master the dealerships and the rules that governed them. The honorary citizenships had been unexpected, in that I hadn't asked for them.

The French one was the clear hand of François Mitterrand, a friendship born of shared struggle and vision, a grandfather figure. He was also the only Frenchman who called me Jean instead of John. The Swedish citizenship seemed perfunctory, but I accepted both without discussion. I sat down to have a frank talk with Georges at his new office.

"Well, you did it," he told me as I settled in the comfortable chair in his new office.

"What did I do?" I asked.

"You told me that you'd love to have me in charge of AMC and Jeep with you as owner. That's exactly where I am now, more or less." I laughed.

"A long way to come from the simple marketing gift of a bulletproof vest."

"Yes, a long and curious route," he said.

"So, what did you want to talk about?"

"My stake is too large. I'm only keeping 20%," I said, dropping the bomb.

"You're acting as a corporate raider?" he said aghast.

"Not at all," I said setting a stack of folders on the table.

"I've organized the remaining European automotive manufacturers as potential acquisition targets. I'm creating a treasury pool with 15. 8% of my stock." He flipped through the many addendum I had kept secret until now.

"Pehr told me about addendum C," he said.

"I certainly didn't expect that every possible manufacturer had a potential synergy with Euro Motors."

"I included a time line of when I expect each to need rescuing. One though is a bit difficult." He paused at addendum G, and looked over the folder at me.

"SEAT?" he asked.

"SEAT," I agreed.

"It'll be great for us, but they are hating what Volkswagen is doing to them. The opportunity won't come until VW starts bleeding cash because of their US expansion."

"I'll keep an eye on the opportunity," he said closing the folder.

"Good. Now when you get a chance be sure to announce the acquisition pool. Let Europe know that Euro Motors values its diversity, but is also willing and able to take in others as well. You won't need to hunt them down and take them when they are about to be thrown to the wolves. They'll come on their own."

"I understand John," he said.

"But I'm not worried about the distant future. My concern is what we have to deal with now."

"The American market," I agreed.

"Each member of the alliance has a specific segment of the American population to target. You need to keep the import of each brand to just one or two models."

"Agreed. Ideally, the most profitable models as well." I smiled, glad he understood.

"Also, you must rely on Dick Teague. Show him what you plan to import before you commit. You won't find a better instinctive gauge to the American consumer. If you think he's wrong, send it to me, and I'll weigh in as well. Together we can reliably tell you if it'll be a hit or a flop or somewhere in between."

"Do you want to test drive them, or is a picture enough?" he asked with a smile.

"We have testing facilities where you can drive without being licensed."

"I'm fine about not driving yet, but thank you for the offer. Pictures are enough: exterior and interior along with mechanical specifications. Lean on Volvo design to improve safety across the divisions. Gas prices are going to be dropping so Americans are going to want big powerful and safe vehicles."

"Yes, I saw that when I was managing AMC."

"The biggest threat to Euro Motors is Japanese exports. It's going to put pressure on the entire automotive industry as they continue to drop prices, increase reliability and deliver better fuel efficiency."

"I understand. I'll keep my eye on it."

"Good. Now I know Teague gave you a list of things to fix, where are you at on those?"

"Saab is swapping to the Getrag and ZF transmissions BMW uses. Volvo is switching to TXL wiring immediately and everyone else is following. BMW is using the new Volvo rear suspension, and I just signed a deal for Renault and Eagle to use Bosch fuel injection just like Porsche does. Oh, and everybody is switching to Bosch electronics."

"Fantastic. Eagle will be the poster child post merger. The best of everybody. Everyone else will be polishing out their defects with each others superior parts. That new Volvo engine design will be perfect for Jeep and Eagle both in 1989. The Douvrin factory making the PRV block will need to run day and night to keep up with demand."

"That is the new aluminum V6?" he asked.

"It is, and one last thing to add," I said with a grin.

"See if you can convince Volvo to put some sexy curves on one of their cars."

"Now you are asking for the impossible!" he laughed.