The BASF Takeover
Waldemar had been forced to set aside a great deal of business at the start of the new year while the women in his life kept him occupied, yet with the help of his capable aides he was able to drive his plans forward without any serious disruption.
Come to think of it, there was still one more thing I needed to prepare for.
The moment his relationship with Alix became official, Waldemar resolved to prepare against the hemophilia her bloodline would bring as a dowry. If he was not prepared to abandon the marriage, then preparing for hemophilia was not a choice—it was a necessity.
Of course, curing the disease with present technology was impossible, but a substitute medicine of sorts could still be developed. The most representative example was a topical hemostatic agent made from the venom of the pit viper.
Waldemar organized his ideas and sent them to his collaborative partner, Bayer Pharmaceuticals.
As for actually making the stuff, the German chemists and physiologists will figure it out one way or another, even if they have to thrash it into existence.
He would simply provide them with money and ideas. The cost involved was of no concern; research funds barely registered as a burden to him. While he was already commissioning Bayer for the hemostatic agent, Waldemar decided to demand the development of a commercial antibiotic as well.
Naturally, this antibiotic did not mean penicillin. Penicillin could theoretically be produced with current methods, yet it remained nearly impossible to mass-produce and distribute. In that sense, the only antibiotic that could realistically be made with existing technology was not penicillin but the sulfonamides—sulfa drugs.
Sulfa drugs had been developed in 1935 by the German pathologist Gerhard Domagk and had proven extraordinarily effective as the first commercial antibiotics capable of suppressing bacterial reproduction. With such a substance in hand, countless pathogens against which humanity currently had no defense at all could be driven back with ease.
To Waldemar, a man who feared only war and disease, the antibiotic was naturally a prize worth coveting. Of course, sulfa drugs were no miracle cure of pure advantages either; their solvent itself was so toxic that the poison alone could kill a patient.
Even so, having them was still better than having nothing—there was no need to belabor the point. Waldemar provided capital and ideas for the development of sulfa drugs as well.
Watching the prince pile commission after commission onto Bayer, John Connor offered a piece of advice.
“Your Highness, rather than continually loading work onto Bayer Pharmaceuticals, why not acquire a chemical company of your own and operate it?”
“Buy a chemical company?”
Waldemar considered the suggestion carefully and decided it was not a bad idea at all. He was collaborating with Bayer for now, but circumstances could change at any time. If a suitable target appeared on the market, he would take it.
“Is there a company on the market worth acquiring?”
At Waldemar’s question, John Connor recited a list of chemical firms as if he had prepared it in advance. Waldemar listened to the explanations until a familiar name made him exclaim, “That one!”
“BASF. I want that company.”
BASF was a giant of German chemical industry that, at the beginning of the twentieth century, would divide the chemical sector with Bayer. John Connor nodded.
“BASF should not be especially difficult to acquire.”
Unlike Bayer, which had long remained a closed private company, BASF had been founded as a joint-stock corporation from its establishment in 1865 and was therefore far less sensitive about shares leaving the hands of insiders.
Moreover, the strife between the founder and the controlling shareholders ran deep enough that, if the price was right, one could buy as much stock as one wished. Listening to John Connor lay out BASF’s internal affairs, Waldemar realized the man had already investigated the company thoroughly.
“So you had your eye on BASF as well, Mr. Connor?”
“It is an excellent acquisition target.”
Waldemar gave John Connor the green light to deploy funds for the takeover. John Connor moved with characteristic speed. He approached Friedrich Engelhorn—the founder who had led the company’s creation and still its largest shareholder—and proposed that if Engelhorn delivered half of BASF’s shares, he would add twenty million marks on top of the purchase price.
“Twenty million marks?”
Friedrich Engelhorn felt genuine astonishment at John Connor’s offer. In truth, the joint-stock company BASF was not yet of such enormous scale. In 1885 its total capital stock amounted to only eighteen million marks.
Of course, valuing the equity of a corporation that had grown incomparably since its early days purely by its capital stock was crude, yet it was equally clear that the company was not worth anything close to the sum John Connor had put on the table. Engelhorn replied that he would consider the proposal carefully.
After seeing Engelhorn off, John Connor also approached the more passive shareholders. Anyone who brought him half the stock would receive an additional twenty million marks. At that offer the shareholders’ hearts tilted toward selling.
“In the end, running the company only gets us a few pennies in dividends. We may as well take the lump sum while we can.”
“True enough. Being outpaced by Bayer as we are, it is hard to claim our company has a brilliant future.”
Before long Engelhorn returned with the shareholders who had agreed to sell and presented himself before John Connor.
“Here is the promised half of BASF’s shares.”
“Well done.”
John Connor paid the premium and, with almost effortless ease, took possession of half of BASF. Had he attempted a proper acquisition and merger through the exchange, the cost might well have been higher.
Compared with that route, this may actually have been the cheaper way.
He immediately informed BASF that his side had become the largest shareholder.
“What did you say? What nonsense is this all of a sudden—that you people have become the major shareholders?”
“If you cannot believe it, check with the Frankfurt Exchange. We purchased the stock legitimately and have taken our place as the controlling shareholders.”
John Connor’s unflappable reply finally made the management grasp what was happening. They had already heard rumors that someone was accumulating shares. The reason they had mounted no proper response was simply that less than a week had passed since the first whispers of stock accumulation. Every face in the room now wore an expression of undisguised gravity.
“Those traitors must have colluded with Engelhorn and sold every last share to these people.”
Even without seeing the details, the situation was obvious. Still, a few members of the board could not bring themselves to accept it.
“Surely not. You’re saying that many people all sold their stock without so much as a word to us?”
BASF’s board of directors was already helpless against the tilted balance of power. In a joint-stock company, justice belonged to whoever held a majority of the shares.
“Well then, now that you appear to have grasped the situation, kindly prepare seats for us on the board.”
John Connor took his place at the board table as if he were an occupying general.
“You mean to take part in management?”
“We will keep watch, but so long as you deliver good results we will not interfere.”
From the beginning Waldemar and John Connor had never imagined they could run a chemical company themselves. Their intention had always been to leave management in the hands of the existing executives. The show of force at BASF was simply a demonstration.
If the management foolishly offended them, a few heads would roll as an example; if the executives understood their position and guaranteed appropriate returns, every one of them would be allowed to keep his post. Through this combination of pressure and inducement, John Connor’s party meant to secure the other side’s submission.
Karl Glaser, a chemist-turned-executive, quickly realized from the terms offered that the newcomers had no desire to manage the company themselves. That did not mean he took them lightly. Men who could seize half a company’s equity in the blink of an eye were not to be dismissed as water.
“Very well. We will provide the seats.”
Glaser decided to accept their demands. Surveillance or not, it amounted to installing overlords on the board. Yet there was no alternative. From that day forward BASF effectively fell under the influence of John Connor’s faction.
Waldemar was astonished at how easily John Connor had swallowed BASF like a slice of cake.
“Just like that?”
“In the end it is greed. Once you offer sufficient profit to men who were never active in management, betraying their friends is only a matter of time.”
After briefly explaining the process of taking BASF, John Connor went on to describe the value of the spoils obtained in this raid.
“BASF Aktiengesellschaft has a capital stock of eighteen million marks, yet last year’s sales reached 18,188,000 marks and operating profit 3,260,000 marks.”
In plain terms, the equity value of BASF easily exceeded its capital stock of eighteen million. Even by the most conservative calculation the company was worth at least twice that figure. John Connor himself estimated that BASF’s true value was more than four times its capital.
“Then why did the shareholders give up such a company so easily?”
“Because they lack confidence in its future. And that, Your Highness, is partly your own doing.”
John Connor pointed out that BASF’s luster had faded relative to Bayer’s overwhelming growth.
“The future, is it.”
Waldemar was confident he could solve that particular problem. If capital was short, he would increase it; if chemists were needed, he would simply lure them from the universities with generous research grants. As with so many things in the world, most of a company’s troubles could be solved with money.
“In any case, now that BASF is ours, please request that they also undertake research on the hemostatic agent and the antibiotic.”
“Understood. I will convey Your Highness’s instructions to BASF with complete clarity.”
While he was at it, Waldemar decided to set the same research tasks before BASF as well. Whichever side produced results first was of little concern to him. The prince settled in to wait, at his leisure, for whatever they would deliver.