A Couple Of Old Raiders Hitch Up AgainRichard A. Melcher
Decades of jogging are taking their toll on 78-year-old Carl R. Pohlad. In the past couple of years, there has been a back operation, hip replacements, and, recently, painful knee surgery. Hobbled as he is, though, the fabled takeover player of the 1980s is suddenly rediscovering his zest for dealmaking. "We've definitely stepped things up," he says.
Indeed, on Mar. 14, Pohlad launched a $178 million hostile bid for Fibreboard Corp., a Walnut Creek (Calif.) maker of building materials. Who is among Pohlad's co-investors? None other than longtime friend and dreaded '80s corporate raider Irwin L. Jacobs.
Should executives nationwide be quaking at the prospect of new raids by the Minneapolis duo? Not exactly. True, both are flush with cash and actively searching out investments. But Pohlad and Jacobs claim they now eschew the debt-fueled swashbuckling of the 1980s. "I want to build companies.... I'm not interested in causing people trouble," says Jacobs, who--often assisted by Pohlad--tilted daringly at companies such as Walt Disney, Avon Products, and Gillette.
Tell that to executives at Fibreboard, who have firmly rejected Pohlad's bid. Pohlad's group began building a 6.8% stake in December, betting that the $265 million company was on the mend after settling $3 billion in asbestos claims. Pohlad generally praises management but says the company should expand more aggressively and exploit holdings that include a ski resort and 80,000 acres of timberland.
Pohlad has plenty of other deals cooking. He gained a 4.9% stake in First Bank System Inc. by selling it his family's bank group for $240 million in stock in 1992. Since then, he has bought 35 mostly rural banks in Texas, South Dakota, Iowa, Wisconsin, and Minnesota, which combined hold nearly $4 billion in assets. Now, he's scouting other financial companies to acquire.
The onetime chairman of Continental Airlines Inc. also remains smitten with airplanes: In October, he paid $10 million for a 13.5% stake in AirTran Corp., a commuter line that provides feeder service to Northwest Airlines Inc. Meanwhile, irked by persistent financial losses for his baseball team, the Minnesota Twins, he says he's willing to listen to offers--as long as the buyer agrees to keep the team in Minneapolis.
As for Jacobs, 52, he is only just now digging out from under his late 1980s wheeling and dealing. In 1988, he merged his collection of boat companies into Minstar Inc., a public company he controlled and took private. Beached by heavy debts and sinking industry sales, Minstar has lost about $120 million since 1990, breached bank covenants, and forced Jacobs personally to pour in at least $68 million.
PUZZLING FLURRY. Jacobs says he's now on the verge of closing on an equity infusion for Minstar of $165 million from the State of Wisconsin Investment Board, members of the DeVos family, who co-founded Amway Corp., and himself. With sales of about $250 million, the company will be renamed Genmar Holdings Inc. and may be sold off to the public. Jacobs is philosophical about his travails with the business. "You need to know how to deal with things when times get tough," he reflects.
These days, Jacobs' investment style is more laid back: In 1992, he raised $500 million for a fund that will only invest in friendly deals. Backers include Pohlad, oil scion Gordon Getty, and the states of Wisconsin and Minnesota.
Finding acquiescent targets, though, may prove difficult. Jacobs' first flurry of bids is puzzling. He now owns Bekins Co.--for the second time. In September, he made a $170 million bid for Mayflower Group Inc., only to drop it when the offer was regarded as hostile by the company's management. Then, in January, he paid about $7 million for Canterbury Downs, a Minnesota horse-racing track that had been built for $85 million--only to flip it for what he says was a profit in mid-March. Now, he plans to buy 40% of an Israeli word processing company.
Jacobs, however, seems less obsessed with dealmaking than he was in the days when his tough tactics earned him the moniker "Irv the liquidator." Indeed, he's thinking about doing some teaching. He says he has been approached by three universities that he says never would have admitted him (he dropped out of the University of Minnesota after three days). Another sign of new priorities: He recently sent a poem, entitled Attitude, to the chairman of First Bank, John F. Grundhofer, stressing a positive outlook over money an appearances.
Mellow raiders? Maybe it's a '90s thing. But executives such as the ones at Fibreboard will need a bit of convincing before they believe its a trend for real.