Family Business Magazine E-Newsletter
June 19, 2007



Contents
1.  Bancrofts reject plan to ensure paper's editorial independence.
2.  Family says it won't sell Hermes stake.
3.  Second-generation chief working to turn Huntsman around.
4.  Avoid actions that foster family feuds.
5.  Talking to the press can be a wise strategic move.





1.  Bancrofts reject plan to ensure paper's editorial independence.  The Bancroft family, which controls Wall Street Journal publisher Dow Jones & Co., has rejected a plan developed by its own lawyers in an effort to preserve the paper's editorial integrity if it were sold to Rupert Murdoch's News Corp., the New York Times reported on June 15. The Los Angeles Times, which obtained a copy of the proposal, called it "an extraordinary document -- unusual in the severity of its prescriptions; stunning in its unspoken assumption of Murdoch's reflexive bad faith; revealing in that, all that notwithstanding, the Bancrofts correctly saw that the guarantees proposed still were inefficient.... [I]t's easy to see how easily Murdoch could -- and, surely, would -- have danced around them. LA Times columnist Tim Ruttan wrote, "At the end of the day, the Bancrofts may have come to grips with the real problem that impedes their ability to do business with Rupert Murdoch ... They want as much of Murdoch's money as they can get but want no one to think the less of them for taking it." Earlier, the New York Times had reported that "In a filing with the Securities and Exchange Commission, Dow Jones said it had amended its compensation plans so that 160 senior managers could take sizable severance payments with them if they were forced out after a sale," a move that suggested that the Dow Jones board thought the parties were close to a deal. In an article in New York Magazine, James J. Cramer, co-founder of TheStreet.com, wrote that Murdoch spoke with him about acquiring Dow Jones 11 years ago. "I told him that the family had no desire to sell," Cramer wrote, "and that the family's law firm might not even show a bid from him to the Bancrofts. He sneered and informed me that one day they would." Since then, Cramer wrote, "much has changed, most of it Dow Jones' own doing, and the chance to stay independent has now been squandered."  (Sources: New York Times, June 8, 2007, June 15, 2007; New York, June 18, 2007; Los Angeles Times, June 16, 2007.)

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2.  Family says it won't sell Hermes stake.  For months, there had been a run-up in shares of Hermes International SA, traded on the Paris exchange, amid speculation "that descendants of the company's founding family would loosed their grip on the firm, possibly clearing the way toward a sale," the Wall Street Journal recently reported. But now, the article noted, "Herrnes shares may be falling out of fashion as business falters and the company's controlling family maintains that it won't sell off its 72% stake." Hermes's first non-family CEO, Patrick Thomas, was appointed in 2005, a move that investors took as a sign the family "would slowly relinquish control of the company," the Journal reported. "But the opposite has occurred." The article noted that the family "has tried hard over the years to insulate the Parisian company from generational change that has resulted in the sale of many other family-controlled businesses." Much of the 72% stake "is locked up in shareholder pacts," the report noted. "In addition, Hermes's legal structure under French law allows for a special committee made up exclusively of family members to designate the chief executive and scuttle a hostile takeover bid.... The company also adopted a poison-pill resolution a year ago to provide further takeover protection." Sales and profit growth have slowed at the company, the article noted. "We will not favor growth at any price," Thomas told the Journal.  (Source: Wall Street Journal, June 7, 2007.)

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3.  Second-generation chief working to turn Huntsman around.  Earlier in the decade, Huntsman Corp. "almost went bust, a consequence of the fact that it was steeply leveraged and that producing commodity chemicals ... is as volatile a business as there is," according to a recent profile in Forbes. Under the direction of second-generation leader Peter Huntsman, the company, publicly traded since 2005, is now operating in 24 countries outside the U.S. and has moved away from the basic-chemical business into higher-margin differentiated and specialty businesses. Huntsman also cut costs through divestitures, the article noted: "For a family company, saying good-bye to longtime associates added to the stress." When the company went public, almost all of the $1.6 billion raised went to pay off debt, the article said; Huntsman is raising another $1.8 billion by selling off factories. "Between credit rating upgrades and reduced debt, Peter has sliced interest expense from $600 million in fiscal 2004 to an estimated $220 million for the fiscal year ending in June. He did this while continuing the buildup in Asia.... Huntsman announced the company's first quarterly dividend in February, and it plans to divest the last of the U.S. commodity operations to Koch Industries for $700 million." But Huntsman stock still trades below its initial offering price, the report noted.  (Source: Forbes, June 18, 2007.)

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4.  Avoid actions that foster family feuds.  "Family feuds are fascinating in their universality and generate a lot of publicity," writes family business adviser Dennis T. Jaffe in The Family Business Conflict Resolution Handbook. "But the personal pain generated by family feuds and the business disasters they create harm employees, families and society in general." Jaffe notes that "The seeds of a family feud are planted years in advance. Patriarchs often don't let their children know where they stand on important issues, how they feel about them or what they want from them." He cites some examples of parental behaviors that can precipitate a feud:


For more advice on preventing or defusing conflict that can tear your family or business apart, see The Family Business Conflict Resolution Handbook. Learn more about the book and see the table of contents here.

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5.  Talking to the press can be a wise strategic move.  The just-published Summer 2007 issue of Family Business Magazine focuses on family companies' ties to their communities. Included in this edition is a two-part report on business owners and the media. "It's certainly logical to dodge bad publicity," writes veteran family business journalist Sharon Nelton, who has also been a public relations specialist for three organizations, "but many family businesses shun favorable notice as well.... The key for family businesses is to make a concerted effort to protect and enhance the image of both the business and the family." Nelton's article offers ten tips for addressing public relations issues. Here are three of them:


For more public relations tips, see "Managing publicity before it manages you" by Sharon Nelton in the Summer 2007 issue of Family Business Magazine. Visit our website for subscription information.

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Family Business Magazine's new Classified advertising section debuts Autumn 2007.  Buy, Sell & Trade with other family-owned businesses in the following categories: Business for sale, Wanted to buy, Supplies, Equipment for sale, Buildings/land for sale, Barter/trade, Misc. $150 per inch per category (approx. 50 words). First 10 one-inch ads received will run free of charge! Call Barbara Wenger at (215) 405-6072 or e-mail bwenger@familybusinessmagazine.com.

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