A U.S. Raider's "Iron Fist in a Velvet Glove"
It was the kind of battle Guy Wyser-Pratte savors: long, difficult, and victorious. On Jan. 22, the board of Oregon-based timber company Willamette Industries bowed to legal challenges by Wyser-Pratte and other minority shareholders by accepting a $6.1 billion buyout offer from Weyerhauser Corp. (WY ) "I'm deliriously happy," says Wyser-Pratte, who is reaping a $5 million profit on the Willamette shares he bought less than two years ago.
That's the sort of payoff Wyser-Pratte hoped to find in Europe a few years ago, when the veteran New York arbitrageur promised to wage war in the boardrooms of the Old World. But these days, Wyser-Pratte's European theater doesn't look much like a combat zone. On Jan. 4, he plunked down $18 million for 5% of German engineering company Babcock Borsig. But instead of beating up on Babcock CEO Klaus G. Lederer, Wyser-Pratte invited him to a friendly dinner in New York. Likewise, he enjoys good relations with GIB Groupe, a Belgian retailer in which he holds a 5% stake.
Has Wyser-Pratte lost his taste for battle? Certainly not, as the Willamette case shows. But in Europe, where his boardroom assaults in the late 1990s often met stiff resistance from entrenched management and family owners, he has learned to take a different tack. These days, he's targeting companies where ownership is more scattered and management is already on his wavelength. "I call it the iron fist in the velvet glove," he says.
Fortunately for Wyser-Pratte, there look to be plenty more such companies. Many midsize European manufacturers and retailers are in a funk, passed over by the 1990s market boom and the wave of restructuring that has transformed most of the region's biggest corporations. Managers trying to hone their competitiveness often benefit from having the support of outside investors. Wyser-Pratte and Lederer agree, for example, that $3.9 billion-a-year Babcock-Borsig would be better off focusing on its submarine-building business while deemphasizing commercial shipbuilding and building management. Judging from the 25% surge in the company's share price in January, other stakeholders welcome Wyser-Pratte's involvement.
As the head of the arbitrage operation of the former Bache & Co. starting in the 1970s, Wyser-Pratte cut his teeth on many a takeover battle in the U.S. Since opening his own firm, Wyser-Pratte & Co., in 1991, he claims he has helped create more than $39 billion in market value for shareholders in companies where he owns stakes.
Shaking things up across the Atlantic has proved more difficult. He and another U.S. raider, Asher B. Edelman, tried for years to break up Société du Louvre, a family-run French company whose holdings include Taittinger champagne and Baccarat crystal. But French courts repeatedly blocked their efforts, and both men have liquidated their holdings. Wyser-Pratte had better luck with French apparel and shoe retailer Groupe André, where two years ago he mounted a shareholder revolt that led to the ouster of its chairman. Since then, the group, renamed Vivarte, has reversed years of losses, posting earnings of $44 million in 2001 on sales of $1.7 billion.
Wyser-Pratte claims he's in no hurry to cash out of Vivarte. But he's clearly happier with quicker exits. In November, he banked an $18 million profit when he sold his 7.8% stake in German manufacturer Rheinmetall. Its shares had more than doubled in value since his investment in early 2000.
Where will this raider strike next? Wyser-Pratte says he's eyeing investments in France, the Netherlands, and Spain. And he could get a chance to grab a bigger chunk of Babcock Borsig, whose biggest shareholder, Preussag, is looking to sell. In that case, Lederer had better watch out. Wyser-Pratte may indeed be wearing velvet gloves these days--but he could easily take them off.
By Carol Matlack in Paris, with Jack Ewing in Frankfurt