Free Threshold Resistance by A. Alfred Taubman Page B

million.
    Mobil countered on May 10 at $37.60 per share, or $316.4 million.
    The next day we returned the compliment at $37.75, or $317.66 million.
    They countered on May 12 at $38.25, or $321.87 million.
    We came back with $38.35 per share on the thirteenth for $322.7 million.
    I will always remember fondly the daily phone calls with my sons, Bobby and Billy, during this manic, high-stakes bidding war. They would always want me to counter Mobil’s offer, and would encourage me with a spirited mix of well-thought-out rationale and youthful optimism (Bobby was twenty-four, Billy just nineteen). Their competitive juices were flowing, and so were mine.
    After a tense weekend, Mobil bid $38.75 per share, or $326.1 million.
    We came right back the next day at $39 per share, or $328.185 million.
    Mobil’s president, who was handling the bidding personally, gave us his full and last shot on May 18 at $40 per share, or $336.6 million.
    My small bump of $0.10 to $40.10, or $337.44, ended the bidding on May 19. We were notified the next day that Mobil had withdrawn—just $3 million below the ceiling I predicted.
    By the aggressive terms of our offering agreement, we had only two months to complete this massive deal. So after a full-court press by all our banks and associates, we met in the Los Angeles offices of Wells Fargo for the closing on July 22, 1977. I had never seen so many lawyers, bankers, and boxes of documents in one room in my life. Unfortunately, the champagne would have to wait.
    Charlie Johnson of Wells Fargo pulled me into a small private room and informed me that there was an unexpected snag. Some years earlier, Don Bren had sold his company to International Paper, which had wanted a presence in the Southern California real estate industry. Things didn’t go as anticipated, so Don bought back his company, granting International Paper certain warrants to buy back in if they wished.
    Don was a partner in Taubman-Allen-Irvine as an individual. But the clever folks at IP wanted Bren’s company, in which they still had the right to 50 percent ownership, to hold the interest in the ranch, thus setting up the opportunity for IP to get into the deal. They were holding up the assets Bren had pledged for our deal without their blessing.
    While we waited in that crowded board room in Los Angeles, Wells Fargo representatives in New York were frantically trying to work something out with International Paper and Bren’s lender, Bank of America, to no avail. Sensing that we were at an impasse, Charlie proposed plan B. Wells Fargo would extend me the credit for Don Bren’s portion of the equity. That would allow us to close on schedule. It would be up to me to collect from Don and let him back into the deal or hang onto the larger ownership stake myself. I agreed to plan B. At the very last minute, Bren worked out a $5 million payment to IP, and we began the hours-long process of signing documents and shaking hands. The closing then went forward without a hitch.
    Despite these annoyances, things worked out very well for us. Without selling any assets, we paid off the banks in fifty-one weeks! I served as the chairman of the Irvine Company, which we incorporated as a Michigan company, for six years. The company’s performance exceeded our most ambitious expectations, paying out 20 percent dividends to the shareholders annually.
    Delighted with our returns and recognizing that intense localmanagement was required to sustain this success, my partners and I (not including the Irvine family members) decided to sell our interests in the company in 1983 to Don Bren. The transaction was based on a valuation of $1 billion. Don continues to ably run the company to this day.
    A billion dollars was a lot of money in 1983. And who wouldn’t be happy with a tenfold profit in six years, on top of the 20 percent annual dividends we paid out? I certainly can’t complain, but I have to be honest. I really