Chương 89: Book 3 - Chapter 15 A

My next stop was Sweden. British Airways offered a direct flight to Gothenburg. I had six seats in first class booked: Matt and I, and four security personnel. Thomas was headed back to work on his other project, LTV. On arrival, after checking into the Radisson SAS Park Avenue Hotel, I called and made an appointment to talk with Pehr Gyllenhammar, CEO of Volvo.

"Dr Cook, welcome to Volvo," he said, shaking my hand.

"Thank you, I'm happy to be here."

"Your call didn't really explain why you were visiting." I looked around the lobby.

"Perhaps there's somewhere we can have a chat, somewhere a little warmer?" I asked as I dusted the fresh snow off my suit.

"Yes, please come to my office."

"Thank you."

"Your Swedish is very good, but I speak English," he told me as I sat down in his warm office after hanging my jacket up.

"Thank you, I have only done the training courses, I haven't had a chance to really practice it with another person. I'd prefer to keep practicing my Swedish if that's okay."

"Certainly. Your accent and fluency are remarkable," he complimented. I just shrugged, I had so many memories of life in Sweden. Not getting the accent right would have been practically impossible.

"I wanted to talk to you about Volvo. I wanted to buy the 15% Renault held, but Georges said he'd sold it back to you already."

"That is surprising. But I think they would have rejected it.

""It's possible. The offer was going to include their ownership of AMC as well."

"Hmm, that is a little different. How much would you have offered?"

"$60 million."

"I'm not sure who you're undervaluing with that offer," he said with a slight scowl.

"Volvo or AMC?"

"A good negotiation starts low and builds until both are satisfied. Doing otherwise leaves the seller feeling regretful for what could have been. I ended up offering $10 million plus taking over the debt for AMC."

"You have that much money?"

"I do. I've got a billion dollars that I'm wanting to invest in the automotive industry." He gave me a sharp nod and a quick smile, appreciating my shrewdness, but trying to control his surprise at the amount of cash I said I had.

"I spent some of it already. I just bought 75% of Aston Martin."

"You'll need most of what is left for the debt, if Renault accepts your offer," he said. I shrugged.

"Perhaps, but I wanted to buy their Volvo stock for a very specific reason: Renault wants to merge with Volvo."

"Yes, everyone knows this. But as long as Renault is government owned, the shareholders of Volvo will reject any merger," he said with a definitive air.

"As they should," I agreed, "Volvo did very well in the United States this year."

"Yes it did," he agreed.

"But I'm here today to plant the seed of an idea. Imagine for a moment, a European car company that can stand toe to toe with Ford, Chrysler, and GMC."

"A beautiful picture, but we are all small compared to those giants."

"A merger to create a new automotive power. A new Euro Motors for a new century. A merger of West-German BMW, Swedish Volvo, English Aston Martin and American Jeep."

"This is a much more intriguing idea than I expected. It's lunchtime. Let's enjoy a nice meal and discuss this further." We discussed a great many things during lunch, but nothing about business. Afterwards, we came back to his office and to business again.

"Yes, I agree the shared supply chain and shared parts and engineering would make all of the European car companies more efficient," Pehr said. This book's true home is on another platform. Check it out there for the real experience.

"Georges Besse has done a brilliant job doing that with Renault. He's actually managed to see the way to an eventual profit in a state owned enterprise. It's only going to grow stronger."

"Yes, he's a very good businessman and manager. He knows when and where to cut for the most effective results. He especially knows where not to cut, a much harder decision."

"I arranged a similar merger a few years ago. A merger of equals. I invested in three different computer companies and merged them to form Axis Productions. It turned the tenth, eleventh and twelfth largest computer software companies into the sixth largest. They have continued to grow maximizing the shared efficiencies post merger. They've now become the fourth largest software company in the world by sales."

"Impressive. It is an interesting idea, I admit. Unfortunately it is too often that to rescue the automotive industry it gets nationalized. Once a government is involved, it no longer has profit or production as the key motivating factor. I think it might be impossible," he said, looking resigned. I countered, leaning forward to set the hook.

"A merger this large cannot be bogged down by national politics or anti-trust fears. To prevent years of delay and public uncertainty, the new structure must be immune to government instability. I propose including a key provision in the new company's charter from day one: that no single government entity will be granted voting rights for more than five percent of the stock, regardless of how much stock they own." Pehr blinked.

"Five percent? That's an extraordinary legal restriction."

"It allows for sovereign investment—like France with Renault—to protect strategic manufacturing plants, without allowing political agendas to dictate the management. It's the only way to satisfy German, Swedish, and English partners that they aren't merely creating a mechanism for multi-national control of their company. It fast-tracks the idea."

"It is a risky proposal. How do you handle the unions and government worries about anti-trust violations?"

"You're right, the greater risk is political and labor unrest. The market will reward a merger, but governments and unions will fight to prevent it from happening quickly," I said, and pulled a stack of paperwork from my briefcase.

"That's why I put together a full brief already. A comprehensive plan for production rationalization that protects core union jobs. Volvo's Torslanda plant, for example, can become the permanent global center for all shared safety R&D for Euro Motors. This framework won't need years of debate. Just a few months of ratification."

"There is one name I think you should include," he said as he began flipping through my brief.

"Saab Automobile AB. It has a critical world leading turbocharger technology and this is the perfect time for it to be divested." I smiled and reached into my bag again.

"Then you need to see addendum C, to see how they strengthen the entire company."

"What about the other addendums?" he asked, flipping to the back to find no A or B.

"There are several other auto manufacturers in Europe. Let's leave them till after we complete the merger," I told him.

"When they flounder Euro Motors can rescue them with a full acquisition." I had an advantage as I could speak to him in Swedish. Any other American would have forced him to use his English, which would have made him less trustful. I spent a week with him going over the thick brief. When he fully understood it, he recognized we had a workable framework. He joined me as I started to visit the other parties listed in the brief.

It would take an additional three months of talking to CEOs, governments, and major shareholders, but eventually to everyone's surprise, we worked out an agreement that followed what they called 'The Cook Plan'. A framework built on that initial proposal that solved so many objections before they could even be made.

"Hello?" I said, as I answered the hotel room phone on a freezing cold Munich morning in February.

"Boss, it's Thomas. I just got a call and your purchase of AMC Jeep from Renault is final as of midnight. $10 million. But you're taking on the debt too."

"Okay. I need to talk to the people there. It has to be in person. I'll get to Paris and take the Concorde. Meet me in Detroit," I told him.

"Understood, Boss. I'm in Tulsa, so it's an easy flight."

"I need you there to look after Dick Teague. So get there quick and get him a room. I want you to make sure he's met at the airport. I'll meet you at the hotel as soon as I can get there, and we'll head to Southfield together. Someone is playing at chaos, notifying you with no warning. I need to be there bright and early when the news drops."

"I'll take good care of Mr Teague," Thomas assured me.

"Excellent. Buy him a first class ticket and call him with the information in the morning. Coordinate with security for the hotel, but pick something I'd like. Safe flight," I said and hung up before he could wish the same for me.

"Good thing Dick stays up to watch The Tonight Show," I muttered to myself as I dialed his home number.

"What?" he answered grumpily.

"Operation Overlord is a go!" I shouted excitedly into the phone.

"What?" he said again only louder and with more confusion.

"It's John Cook. I own Renault's share of AMC as of midnight Paris time. I need you to meet me in Detroit."

"Shit!" he said, I could hear his LazyBoy recliner move upright with a heavy thunk.

"You did it?" he asked incredulously.

"I did. $10 million plus debt. I already own four percent of the company, so I'm now the undisputed controlling shareholder. Thomas Franks will call you in the morning with flight information. He'll meet you at the airport."

"I can't believe you did it? Does that mean that people like my plan?" he asked.

"They do, unfortunately they are calling it 'The Cook Plan.'""I don't care, let them think that. You had most of it to begin with."

"So you ready to be President and CEO of AMC Jeep?" I asked him.

"Damn right. I saw that drawing you sent of a Jeep truck. That Eagle SUV was a beauty too. Damn sexy, I'm sure I can build it."

"Just remember, out with French style, back to American ingenuity!"

"Damn right, see you in Detroit kid," he said, and hung up.