Boardroom decision making

SITUATION

Standard Can is a multinational corporation based in Dallas, Texas. Its latest acquisition is J.F. Hiltmann und Söhne AG of Dusseldorf, the makers of Maxy sauce. Standard Can's President, Jerome Fantam, intends to close Hiltmann and sell off its valuable property assets to improve his corporation's cash flow, but in the boardroom there is serious opposition to his plan.

CHARACTERS

LANGUAGE

Beginning a power struggle

22.1 Document study

This is an article from a business journal about an attempt by Standard Can to take over Hiltmann. Read through it carefully. What does the writer think may happen to Hiltmann if the takeover goes ahead?

22.2 Reading for key words

Find the words and phrases in 22.1 that tell you the following:

22.3 Listen and read

Leo, Patricia and Stephen are senior executives of Standard Can. They are about to go into a meeting at their European head office in Vienna. What are Leo and Patricia trying to do? Does Stephen agree with them?

LEO	Er - Patricia! Could we have a quick word before we go in? By the way, I'd like you to meet Stephen ...
PATRICIA	Oh - you must be Stephen Sablon, the new European Marketing Director.
STEPHEN	That's right.
PATRICIA	I'm Patricia Hart, Wholesale Distribution. How do you do?
STEPHEN	I'm pleased to meet you, Patricia, I've heard ...
STEPHEN	Yes, I'm sure you have, but could we concentrate for the moment on the business in hand? Item five on the agenda for this meeting is the Hiltmann takeover. I've just heard from a very reliable source that we now have at least fifty-five per cent of the shares, so it looks as though it's in the bag!
PATRICIA	What Leo is saying is that we want to make certain the right decisions are taken at this meeting about the future of Hiltmann. Pressure is going to be brought to bear on the directors to close down the company and dispose of its assets.
LEO	Whereas I see Hiltmann becoming a nice little profit centre - under the right management, if you follow me. Now, Stephen, I assume that I can count on your support?
STEPHEN	Well, I think I'd like to hear the arguments on both sides before I make any decision.
LEO	You can't sit on the fence, Stephen.
STEPHEN	Shall we go in?

22.4 Speaking practice: looking for support

Listen to this conversation. Then listen again, and speak the part of the man.

22.5 Listen and read

Two hours later, the meeting ends. What decision has been made about the future of Hiltmann? Why is Jerome Fantam, the President of Standard Can, so angry? Why does he mention motorcycles?

JEROME	Stephen! Why didn't you support me over the closure of Hiltmann?
STEPHEN	Because frankly, Mr President, I think your policy proposal is short-sighted. OK, get rid of the Hiltmann management - they need a shake-out. But they did turn over seventy-three million dollars last year.
JEROME	Chicken feed, Stephen. You let me down.
STEPHEN	You won't be saying that three years from now. The point about Hiltmann is their brand name is a household word in half the countries of Europe. Why do you want to throw away eighty-five per cent brand recognition?
JEROME	We control the company, we can use the brand any damn way we like. We can use it to sell - motorcycles, if we want to.

22.6 Structure practice: conceding a point

In 22.1, the journalist writes:

Hiltmann directors are said to have recommended acceptance of StanCan's offer of one SC ordinary share plus DM 4.78 for each Hiltmann share, even though this values their company at a puny $37m.

In 22.5, Stephen says:

OK, get rid of the Hiltmann management - they need a shake-out. But they did turn over $73 million last year.

In both cases two statements are being made, and one of them is being presented as surprising in view of the other. You can use 'even though' or 'although' as in 22.1, or 'but' as in 22.5 to do this, but you must not use both.
Rewrite the pairs of sentences below, using 'although' or 'even though', and then rewrite them again using 'but'.

A shareholders’ meeting

22.7 Document study

Standard Can's Annual General Meeting is due. This is an extract from the President's address in the annual report. Read through it carefully. The President's statement is intended to inform shareholders but also to reassure them. Which words in the extract are chosen specially to make the shareholders feel good about the company?

The past year has been particularly fruitful in new acquisitions; no fewer than six new wholly- or part-owned subsidiary companies have been incorporated into the Group.

All takeovers and mergers are in line with our corporate strategy and every element in our growing family has a vital role to play in our development, guided always of course by the forces of the marketplace.

ANNUAL REPORT

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22.8 Listen and read

At the shareholders' meeting, the President approaches the end of his speech. Listen to what is said. Why is Anton Hiltmann allowed to attend this meeting? Why is he allowed to speak?

JEROME	... a vital role to play in our development, guided always of course by the forces of the marketplace...
ANTON	Shame!
CHAIRMAN	Quiet, please - ladies and gentlemen! Order!
JEROME	If the gentleman who spoke just then wishes to raise a point of order, let him stand up and speak up!
ANTON	With great pleasure, Mr President!
CHAIRMAN	Stay where you are, please, sir, the steward will bring you a microphone... Please identify yourself.
ANTON	Anton Hiltmann, ordinary shareholder... In his annual report to us, the owners of Standard Can, Mr Fantam says that the actions of the board of directors are guided by market forces. In my experience, Mr Chairman, these decisions are too often guided by the personal ambition and prejudices of members of the board!

22.9 Listen and read

The shareholders' meeting continues. Listen to what is said. Why do Anton Hiltmann and the chairman argue about orders and rules?

CHAIRMAN	Quiet, please! May I remind you, Mr Hiltmann, that under standing orders you are entitled to raise points of order but not to question the speaker.
ANTON	I ask, Mr Chairman, that the speaker should be ruled out of order for wasting the time of the meeting. The treatment of the management and employees of J.F. Hiltmann Söhne since the takeover six months ago shows that market forces have nothing to do with this company's decision making!
JEROME	I'd like to take you up on that, Mr Hiltmann - after the meeting!
STEPHEN	[To Patricia] This is what comes of paying for takeover bids with your own equity. Why didn't Standard pay cash for Hiltmann?
PATRICIA	[To Stephen] Because if you ask me they hadn't got it.

22.10 Writing practice: an eye-witness account

As a Standard Can shareholder, you attended the AGM. You are also a director/shareholder of a small company which Standard Can is interested in; it has already bought 12% of your company's shares. Write a short report for your colleagues, telling them what happened at the AGM, and what might happen to your own company.

22.11 Document study

This article appeared on the city pages of a daily newspaper the next day. Read through it carefully, then do the exercise that follows.

22.12 Writing practice: Stephen’s notes

Stephen has attended all of the meetings and read all of the reports on these pages. He now has to write a report on what Standard Can should do with Hiltmann. Before he does this, he needs to organise his notes. What is Fantam's position? What is Hiltmann's position? What other information and speculation is there? Write these notes for Stephen from all of the things you have heard and read in this lesson so far.

Making the best of a difficult situation

22.13 Listen and read

Stephen has a meeting with Jerome Fantam. Listen to what they say. What decision has been made? What new information does Stephen learn about Standard Can?

JEROME	Stephen, thank you for coming in today. I guess you know what I want to discuss with you. I had a long talk yesterday with Anton Hiltmann, who turns out to be a cleverer businessman than I had given him credit for. I won't bore you with all the details, but the upshot was that he convinced me Hiltmann AG should not only continue trading but it should continue to exploit the Maxy brand name.
STEPHEN	Good for him.
JEROME	Hm. Yeah. Well, I think I ought to put you a little more fully in the picture. I was counting on the sale of Hiltmann assets , particularly in the real-estate department, to ease Standard's cash-flow problems, which I don't mind admitting are a little more pressing than you may realise.

22.14 Document study

Stephen's report and market survey is circulated to senior managers. His conclusions are printed below. Read through them carefully. Does the report praise or criticise Standard Can's policies?

22.15 Writing practice

The conclusions in Stephen's report are very brief, but they are also phrased in very formal language so that it is sometimes difficult to understand. Rewrite his conclusions in simpler, less formal language so that it is easy to see what he means.

22.16 Listen and read

In another meeting in Jerome Fantam's office, Leo, Patricia, Stephen and Jerome discuss the report. Listen to what they say. Stephen's plan is good because it should succeed, but it's also good if it fails. Why?

LEO	I mean, this paper of Stephen's - it's just so much hot air. These are platitudes.
PATRICIA	Except, perhaps, the suggestion for a test-marketing exercise.
STEPHEN	Thank you. But if we mean to implement the proposal, we have to move fast.
JEROME	I agree the time-scale is short. Did you have any particular company in mind as a test-bed for this scheme of yours?
STEPHEN	Well, I hardly like to mention the name but, er, Hiltmann?
JEROME	Why Hiltmann?
STEPHEN	Good location. Good market position. Good product.
PATRICIA	And if it came unstuck , it would be easier for us to back out. We could say this was something that was already in the pipeline before the takeover.

22.17 Listen and read

The meeting continues. Why are Jerome Fantam and Stephen both willing to try the test-marketing exercise?

LEO	Hm. You want to run a marketing exercise based on a one-product, one-market company.
STEPHEN	No. We must diversify the product range, repackage it and establish a new brand image in a market that up till now Hiltmann has never penetrated. I suggest Greece.
LEO	Stephen, to launch a new product range takes years.
STEPHEN	It does in Standard Can, that's why we're in such deep trouble. There's so much red tape and bureaucracy in this organisation, people are scared to think for themselves... I'll put my job on the line , Mr President: second me as brand manager to Hiltmann for six months , and I'll have every Greek kitchen loaded with Maxy products.
JEROME	And if you don't?
STEPHEN	If I don't... I'll resign my directorship.
JEROME	It's a deal.
LEO	Provided you can sell it to Anton Hiltmann.
JEROME	Oh, I'll sell it to him. Trust me.

22.18 Writing practice: Jerome Fantam’s notes

Jerome Fantam also keeps notes of what has happened. Write notes about the things that have happened in 22.13-22.17. Remember that you must present what has happened from Jerome Fantam's point of view, and say what he thinks about them. Read the documents again, and listen to the dialogues - they will help you to work out what Jerome's attitude is.