"Robert Sturgeon" wrote in message
news
On Mon, 29 Aug 2005 00:14:42 GMT, "John R. Carroll"
wrote:

(snip to the heart of the matter (perhaps).

What were the examples of "green mail"? How did that work?

In the Good Year instance Bob Mercer, GoodYear's chairman, paid Sir James
GoldSmith a substantial premium to go away.
Goldsmith was trying to buy and reorganize Goodyear. They were
underpreforming. Mercer saved his job. Green Mail is a form of extortion.

If "green mail" forced Mercer to get Goodyear to stop
underperforming and start performing up to its potential, I
see that as a Good Thing. Extortion? To force Mercer to
get Goodyear performing? I don't think so.

(rest snipped)



He didn't.
Good Year did it's level best to become an unattractive acquisition. They
took on a mountain of new debt that resulted in cuts to the activities that
are frequently the first to go when servicing debt incurred to by back
outstanding shares. R&D took a pretty good hit. It would be like you
knocking holes in the walls and destroying the heating and plumbing of your
house then taking a huge mortgage to pay for repairs in order to keep a
buyer away. Then, as insurance, you write the interested party a big check
to get back the section you sold him at 5 times the price he paid you in
exchange for an agreement with him to leave the neighborhood.
I have seen it argued that this kicked off the move by American auto
manufacturers from American suppliers to the Japanese tire companies.
Bridgestone subsequently acquired Firestone as a "white knight" because
Bridgestone is a tire company and not a management specialist group like
KKR. I won't look because it isn't critical but I believe that Cooper and
Titan are the only survivors of the tire wars and I wouldn't be surprised if
it was only Titan.

--
John R. Carroll
Machining Solution Software, Inc.
Los Angeles San Francisco
www.machiningsolution.com