Family
Business Magazine E-Newsletter
September
16, 2008
Contents
1.
Slim buys a 6.4% stake in New York Times Co.
2.
LeFrak family enters Los Angeles commercial real estate market.
3.
Shareholders press for consummation of Apollo-Huntsman deal.
4.
Alberto-Culver to acquire P&G's Noxzema brand.
5.
Paolo Pininfarina succeeds his late brother as chairman of Italian auto
firm.
6.
An entrepreneurial spirit helps ensure business continuity.
7.
When the business lacks a succession plan.
1. Slim buys a 6.4% stake in New York
Times Co. Mexican telecommunications billionaire Carlos
Slim Helu and his family have acquired a 6.4% stake in the New York
Times Co. "Mr. Slim has a history of buying depressed assets he can
later sell at a profit...," the New
York Times reported. His recent purchases include Saks, owner
of Saks Fifth Avenue Stores, tobacco company Altria and
telecommunications company Global Crossing, the article said. An
article in trade publication Editor
& Publisher said that "Slim's history suggests that he sees
in the Times Co. something Wall Street is missing." The Times noted, "Mr. Slim's investment
marks the second time in less than a year that the Times Company's
falling stock price has attracted interest from deep-pocketed
outsiders. A pair of hedge funds, Harbinger Capital and Firebrand
Partners, bought just over 20 percent of the company's Class A stock
and secured two seats on its board this year, promising to shake up its
business strategy." However, Editor
& Publisher reported, "There's no indication that Slim will
be the kind of activist shareholder at Times Co. as the Harbinger
Capital Partner/Firebrand combine has been...." The Wall Street Journal noted,
"Mexicans called Mr. Slim 'Midas' in the 1980s for his ability to buy
companies on the cheap and turn them around. But more recently, he has
taken a hands-off approach to most of his portfolio investments and
doesn't intervene in a company's management. He often cites Warren
Buffett as an inspiration, as well as legendary value investor Benjamin
Graham." A Newsweek.com article said that at a town hall meeting with
employees, Times Co. chairman Arthur Sulzberger Jr. "said he'd been
aware of the potential for an investment as a result of previous
conversations he'd had with Slim's representatives about the Times's
plight and prospects." (Sources: New
York Times, Sept. 11, 2008; Editor
& Publisher, Sept. 10, 2008; Newsweek.com, Sept. 11, 2008; Wall Street Journal, Sept. 12,
2008.)
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to the top.
2. LeFrak family enters Los Angeles
commercial real estate market. Although the commercial
real estate market is currently floundering, the New York-based LeFrak
Organization is embarking on a major expansion, Business Week reported. Over the
past year, the family company "has plunked down $185 million on three
office buildings in Los Angeles after largely hibernating during the
recent buying frenzy," the article said. Business Week noted that "Current
conditions favor deep-pocketed family empires like the LeFraks, San
Francisco's Shorensteins, and Houston's Hines clan. With lending drying
up, cash is a must." According to the report, "The LeFraks will need a
long-term mentality, given the state of the market..... [I]t could take
years, if not decades, for the LeFraks to show a profit on their recent
purchases." Business Week
reported that LeFraks sold off $300 million in Brooklyn apartments to
fund their move, and "took advantage of an IRS move that allows them to
defer the capital gains taxes on the properties if they reinvest the
money in real estate within six months." (Source: Business Week, Sept. 8, 2008.)
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to the top.
3. Shareholders press for
consummation of Apollo-Huntsman deal. Hedge funds D.E.
Shaw & Co., Citadel Investment Group, MatlinPatterson Global
Advisers LLC and PentwaterCapital Management LP have proposed a plan to
finalize a deal to sell Huntsman Corp. to Apollo Management LP, the Wall Street Journal reported.
Apollo's portfolio company Hexion Specialty Chemicals had withdrawn an
offer for Huntsman, saying Huntsman's financial situation had declined.
The hedge funds' proposal "essentially involves Huntsman shareholders
providing at least $500 million in funds to help finance the merger,"
the Journal reported. "The
hedge funds are offering to leave money in Huntsman that they can
recoup over time if the company achieves performance targets. If
Huntsman doesn't meet those targets, the shareholders will leave those
funds in the company, which would essentially reduce Apollo's purchase
price from $28 a share to $25.25 a share." The article added that "The
Huntsman family -- the company's largest shareholders -- will help fund
the financing offer." Meanwhile, a trial is now under way in Delaware
Chancery Court. Apollo is asking the court to rule "that Hexion has no
obligation to go through with the buyout because Huntsman's weakened
condition renders a combined Hexion-Huntsman insolvent," the Journal reported. "A ruling in
Huntsman's favor won't necessarily result in a deal, and could be the
beginning of a protracted legal fight." Chairman Jon Huntsman told the Journal, "I will fight this until
the day I die. Private-equity firms have taken over America, and we
will fight it." Huntsman also has sued Apollo in a Texas state court,
"alleging that Apollo fraudulently interfered with Huntsman's efforts
to finalize a deal with another potential buyer," the Journal
reported. (Source: Wall Street
Journal, Aug. 29, 2008 and Sept. 9, 2008.)
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to the top.
4. Alberto-Culver to acquire
P&G's Noxzema brand. Alberto-Culver Co. will buy the
rights to Procter & Gamble's Noxzema skin care business, the Business Courier of Cincinnati reported.
Alberto-Colver "is acquiring global rights and trademarks for the brand
and its existing business in the United States, Canada and portions of
Latin America," the article said. "P&G will continue to own Noxzema
shaving, antiperspirant/deodorant, body wash and body soap products in
Western Europe." (Source: Business
Courier of Cincinnati, Sept. 8, 2008.)
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to the top.
5. Paolo Pininfarina succeeds his
late brother as chairman of Italian auto firm. Paolo
Pininfarina has been named to succeed his younger brother, Andrea
Pininfarina, as chairman of Pininfarina SpA, an Italian company that
designs Ferraris and manufactures the ford Focus Coupe Cabriolet and
Volvo C70, the Wall Street Journal
reported. Andrea Pininfarina, who had been chairman and CEO of the
firm, was killed in a motorcycle accident in August. A new CEO has not
yet been named, the article said. (Source: Wall Street Journal, Aug. 13, 2008.)
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to the top.
6. An entrepreneurial spirit helps
ensure business continuity. "For longevity of an
enterprise, opportunity recognition and exploitation must become a
default mode," write Frank Hoy and Pramodita Sharma in The Family Business Shareholder's Handbook.
"The structure of the organization can make or break the process." They
offer some guidelines for family firms seeking multigenerational
survival and success:
- Nurture a
culture that tolerates both change and failure.
- Continue
to engage in opportunity recognition and exploitation as years roll by.
- Prepare
both managers and family members to accept entrepreneurial leadership.
- Ensure
that selfless sharing and grateful receiving continue through various
life cycle states of the firm and the individuals in it, recognizing
that the identity of giver and recipient, and the content of exchanges,
change over time.
- Engage
and rely upon external experts who are capable of and willing to
communicate and who can understand the perspectives of the senior and
junior generations of both family members and non-family executives.
For information
on the board's role in fostering entrepreneurship, see The Family Business Shareholder's Handbook.
Learn more about the book and see the table of contents here.
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to the top.
7. When the
business lacks a succession plan. "The two most
predictable consequences of the failure to focus on long-range
succession planning are the faltering of a business left without a
leader and unhealable injuries to the family resulting from fights over
control," write Henry C. Krasnow and Kay Vogt in the just-published
Autumn 2008 issue of Family Business
Magazine. "The goals of wise estate planning cannot be achieved through
wishful thinking alone," they write. "But steps can be taken toward
these goals, either with or without the help of the family business
owner who is in denial about the problems that would be caused by his
or her death." Here are their recommendations:
- Convening
meetings (with or without the business leader).
- Creating
a plan for building trust among the siblings and their surviving parent.
- Investing
in leadership assessment and training.
- Devising
a succession plan for the family business.
"Ultimately, if
successful, this should result in the family being able to agree on
governance structures that will help the business and the family to
succeed," Krasnow and Vogt write.
For more family
business tips, news and features, including a profile of the Gallo
family of E.&J. Gallo Winery, see the Autumn 2008 issue of Family Business Magazine. Learn how
to subscribe to our award-winning print edition here.
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