As first encounters go, this one was a disaster. Back in 1982, J. Peter Grace, the mercurial chief of W. R. Grace & Co., was heading a commission created by President Reagan to study cost control in the federal government. Into a meeting walked J. P. Bolduc, then a vice-president with the consulting firm Booz Allen & Hamilton Inc. Bolduc, under the impression he was going to see Grace alone, unexpectedly found himself having to expound in front of 35 people on how the commission should be run. Grace challenged Bolduc's assertions and made some snide comments about consultants. Bolduc stormed off, vowing never to work for the commission -- let alone for Grace.

Bolduc apparently doesn't carry a grudge. After an impressed Grace called him repeatedly, Bolduc relented. He not only joined the commission but also threw in his lot as a senior vice-president with Grace's sprawling $6.8 billion industrial conglomerate a year later. Today, Bolduc, 52, is the company's president and heir apparent, although the 78-year-old Grace has no plans to retire. "I'm running the company," he huffs. Grace continues to plot strategy, while Bolduc oversees operations. And with the boss's apparent blessing, Bolduc has begun to dismantle much of the empire Grace built in his 46-year tenure at the top. "Clearly, Peter Grace has told him what he wants to do," says Peter S. Lynch, former manager of Fidelity Investments Inc.'s Magellan fund and a Grace director since 1989. "And J. P. Bolduc has ideas of his own."

Bolduc spearheaded the radical restructuring Grace unveiled in early November. The company plans to shed $1.5 billion worth of assets, or 24% of its total, while refashioning itself around its core specialty chemical and health care operations (charts). And in contrast to Grace, Bolduc wants more centralized control over his domain, while demanding better bottom-line performance. An earnings laggard in recent years, the company has set some ambitious goals -- 10% annual earnings growth and a 20% return on equity by 1995.

SCANTY EXPERIENCE. Getting there is no cinch. Despite shedding assets such as restaurants and retail stores in recent years, Grace is still a grab-bag of 28 businesses with more than 100 product lines ranging from cocoa to plastic wrap. Its return on equity averaged just 8.6%, compared with 13.6% for the average company in the Standard & Poor's 500-stock index. And Grace's balance sheet is no prize. Long-term debt had soared to $1.9 billion, or 54% of total capital, at the end of 1990 as the company borrowed to finance capital spending and outlays such as dividend payments. Cash flow has been negative since 1986.

Then, too, there's the question of Bolduc's rather scanty hands-on operating experience. Aside from a brief stint as chief financial officer, Bolduc has spent most of his nine-year career at Grace overseeing the company's cocoa and other specialty businesses. Some former executives wonder whether he has the kind of managerial knowhow to run a far-flung outfit. "Bolduc has never run an operating unit for any period of time," says one former insider. Retorts Bolduc: "People told me they thought I'd be gone in 90 days. I'm still here."

Bolduc is determined to prove his critics wrong. His first task: carry out the company's planned asset sales. Grace has already sold six businesses, including its feed and automotive-chemicals companies, for more than $230 million. And it expects to pick up another $370 million from divestitures by yearend. If that happens, Bolduc figures the cash, plus the savings from trimming capital expenditures this year by 22%, to $400 million, will allow the company to reduce debt to a more comfortable 45% of total capital by the start of next year. Further savings should come from the shift this summer of Grace's headquarters from Manhattan to Boca Raton, Fla. And more relief will come in 1992, when Bolduc expects to unload an additional $900 million worth of businesses.

For future growth, Bolduc is scouting out new markets and acquisitions for the five specialty chemicals businesses Grace intends to keep. To get more mileage from standbys such as Cryovac plastic packaging, Bolduc aims to expand it from food service to health care and other products. Grace is also bolstering its No. 3 position in industrial water treatment, spending $42 million last year to buy three companies in Europe and one in Australia. Bolduc figures this $241 million business will grow 15% annually.

STILL SHOPPING. He also has aggressive plans for Grace's second core business, health care. Through its National Medical Care Inc. subsidiary, Grace is the largest nonhospital supplier of kidney-dialysis service in the U. S. Grace's health care businesses produced sales of $875 million last year, or 13% of the total, and analysts say it should grow at up to a 20% annual clip for the next several years. The company also plans to increase its market share by buying independent dialysis centers.

Grace says he backs the changes Bolduc is making. And so do investors: Since January, Grace stock has risen 60%, to about 39. "Bolduc has done a marvelous job of orchestrating the company," says Mark R. Gulley, a Morgan Stanley & Co. analyst. But can this maestro help the company's earnings hit the high notes? This year, Grace's earnings are expected to grow by only 6%, to $217.7 million, on $6.9 billion in sales, figures Merrill Lynch & Co. If that doesn't change soon, Bolduc may find himself wishing he hadn't taken those phone calls from Peter Grace after all.

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