Part 29 (1/2)

Coming from the Company that had said nothing public for most of three hundred vears, McGiverin's tactics were refres.h.i.+ng. He announced the details of The Bay's $3 1 0-million offer for Simpsons (at $8.2 7 a share, 2 7 percent over market price) on CTVs Canada AM and made himself constantly available to the media, which quickly became caught up in the ”Store Wars” battle for 484 MERCHANT PRINCES.

control.* Each side issued earnings figures, equity and growth potentials, and lobbied hard in Ottawa to influence the Foreign Investment Review Agency.

In an imaginative defensive move, on December 11 Simpsons declared a dividend payable December 14 consisting of its entire holdings of Simpsons-Sears. This was supposed to blow the HBC bid out of the water as it reduced the value of the Simpsons shares to less than one-third of the HBc bid of $8.27 (Simpsons shares. .h.i.t a low of $2.3 5 in December 1978). But in their haste to pay out the dividend, the Simpsons group had violated stockexchange rules on notice of dividends and got themselves in trouble with the regulators. The Toronto Stock Exchange normally sets an ex-dividend date five days before payment, but Simpsons paid the dividend only three days after its declaration, which was clearly against the rules. Trading in Simpsons shares was suspended on December 14.t On the saine day, Trade and Commerce Ministerjack Horner announced the FIRA approval of the merger. McGiverin didn't miss a step, sweetening his offer (to

*Three of Toronto's most prestigious law firms were engaged in the Store Wars battle, but with a twist. When Don McGiverin phoned Alex Maclntosh to line up Blake, Ca.s.sels for The Bay, he was sheepishly told that not expecting a Bay move, they had some months earlier agreed to represent Sears in its merger negotiations. So McGiverin recruited McCarthy & McCarthy-Peter Beattie for the corporate work and Donald Macdonald, a former Liberal cabinet minister and later High Commissioner to the United Mngdom, for government relations. Tory, Tory acted for Simpsons.

t Burton wrote in his private diary that evening: ”I no longer feel in charge because there are just too many legal manoeuvres going on from several directions at the same time. We must put our faith in Jim Tory and G.o.d.. ~ ”

MCGIVERIN'S RUN 485.

$388 million by including the dividend as well as the Simpsons shares) and declaring lie was still going after Simpsons and to h.e.l.l with Ottawa.

Then, in the final hours of Sunday night, December 17, just before the hearings into the Simpsons irregularities by the Montreal and Toronto stock exchanges, Chicago torpedoed Colonel Burton. ”In terms of an alternate merger proposal,” Sirnpsons lawyer Jim Tory told a surprised group of reporters before the hearings started, ”a disagreement with our American partners could not be resolved. It's a sad (lay for us.” Burton, for once abandoning his code that the worse things are the more cheerful the commanding officer must look, could only gasp: ”The toughest blow . . . a partners.h.i.+p of twenty-live years, out the window. . . .” He went home to Limestone Hall that night, walked among the pawing horses in his stables, watched the Canada geese bed down between the big stone house and the pond, and saw the moonlight glistening cold and blue on the icy fields. Then he went to bed but just lay there, wondering what had happened to the world of loyalty and civilized behaviour that had sustained him until now.

What had happened was not simple to explain or understand. Certain conditions had been attached to the original deal, allowing Sears, Roebuck to back out. The main escape clause stated that if any third party acc.u.mu lated more than 10 percent of the merged company's stock, Sears could withdraw its approval for the merger.

Burton and his family had started out owning less than 2 percent of Simpsons, and he had diluted his position by the dividend so it was entirel ' v likely that a financial inst.i.tution such as Royal Trust could-even inadver tently-acc.u.mulate 10 percent and activate the escape clause. Without Sears reversing its conditions, the deal was not feasible, and Burton lacked the clout-or shares-to persuade Chicago.

486 MERCHANT PRINCES.

Burton and Tory did their best. The Simpsons chairman was on the phone almost constantly with Sears chairman Ed 'Felling, all but begging him to lift the I 0-percent restriction or at least give the issue a breather until after Christmas, when the Simpsons chairman could formulate fresh defence strategies. Tory meanwhile had been calling Jack Kincannon, known in the company as ”a professional son of a b.i.t.c.h,” then Sears' chief financial officer. By early Monday morning, Tory was tracking Kincannon and several other Chicago executives on their car phones as they were driving to work, making desperate appeals to have ”that d.a.m.n provision” waived. ”We couldn't get them to move,” he recalled. ”We kept postponing the hearing to ten and then eleven o'clock, but at the end f told them, 'Okay, look, if you're not going to support its, we're walking away from the hearing, and we'll take what we get.”'

What Simpsons got was the dubious privilege of running up the white flag and surrendering to Don McGiverin.

Sears insiders gave a slightly different version of this dramatic exchange, pointing out that they had used the 10-percent provision as a handy escape clause because they lacked confidence in Burton, in Canada and in the idea of trying to run downtown department stores. They were angry that under the agreement Simpsons reached with the FIRA, their voice in Canadian retailing would have been considerably diminished. Just as in 1968, they were happy to have Simpsons' management do anything it wanted-providing Chicago had the final veto power. They had used The Bay's raid as an excuse to cut their links with Simpsons, convinced that a freestanding Sears operation in Canada meant less trouble and more profit.

Allan Burton's life was never the same after that. ”It's different,” he wrote in his diary. ”I've been my own boss MCGIVERIN'S RUN 487.

for thirty years, roughly, and I think that once you're not in the public eye and not in a top position, there is a very subtle erosion of power that you didn't even dream you had.... I don't think wealth can buy happiness or peace of mind, or anything else. But having the means to produce situations of happiness for yourself and other people is a very satisfying thing. I can conceive being happy within a cabin. I don't need all this. I'd like to have a nice wife like Betty; and I'd like to have a good horse, and a few things . . .”

Just before Chi istmas, 1978, the final handover was completed. By the end of that year, Donald McGiverin had achieved his goal. The Hudson's Bay Company had become Canada's pre-eminent retailer. Now he could enjoy his new corporate stature, consolidate things, get back to walking around the floors of his stores chatting up the staff, have some fun. Little did he suspect that the Company he had built into the country's retailing giant was about to fall under the tight-fisted control of a most unexpected outsider-Lord Thomson of Fleet.

PART IV.

FAREWELL TO GLORY.

CHAPTER17.

YOUNG KEN.

The worlds eighth-richest individual ... Tbanison acts and looks its ifte were a s-Inall-town bank-teller living near tbe poverty line.

IIF SHAMBLES THROUGH LIFF, his limb movements a study in xA,kwardness, doing none of the things one would expect a man of his means and opportunities to venture and enjoy. Deferential to the point of absur- dity-and stingy to a point far beyond that-Ken Thomson has turned self-effacement into an art form.

His astonis.h.i.+ng communications empire swirls about him, throwing off $4.4 million a week into his personal dividend account, employing 105,000 on four continents, and threatening to become the world's largest media company. It already ranks fourth-after Gerinany's Bertelsmann, Capital Cities ABC and Time Warner, Thomson publishes 175 newspapers (with a dailv circulation of 4.5 million)- -more than any other firm-and sells an incredible 40,000 other editorial products, including 145 magazines, 188 weeklies, and a.s.sorted books, directories, newsletters and softwear packages.

There's no corporate kingdom quite like it anywhere. Besides the Hudson's Bay Company and his publis.h.i.+ng holdings, Thoinson owns a real-estate arm (Markborough, with a.s.sets of $2.3 billion) and an overseas travel subsidiary that accounts for 40 percent of England's package toLir business and owns five hundred Lunn Poly ”holiday shops.” He also is sole proprietor of Britannia Airways, the United Kingdom's second-largest airline,

491.

492 FAREWELL TO GLORY.

which in 1990 carricol six million pa.s.sengers aboard fortv, jets. (Sixteen more are on order.) Because the Thonison companies' debt ratios are unusually low and their credit lines are virtually unlimited, Ken is in the enviable position of being able to buy any $5-billion compet.i.tor. That would overnight make him the world's media king.

By nud-1991, Thomson's personal equity holdings were worth $7.7 billion.

The July 22, 1991, issue of Forbes, which annuall~ tallies the wealthy, ranked him as the world's eighth-richest individual. The listing placed Thomson well ahead of Gerald Grosvenor, sixth Duke of Westminster, who is Englands richest man, and such celebrated moneybags as Italy's Giovanni Agnelli, Hong Kong's Li Ka-s.h.i.+ng, the Gettys, the Rothschilds and the Bronfinans. f le is also the richest Canadian.

Unlike these and other worldly figures who qualif~-as rich and famous--and behave as if they wereThomson acts and looks as If he were a small-town bank-teller living near the poverty line. He spends vir- tually no money on himself and divulges no public clues to ~is private thoughts or personal motivations. Compulsively shy of personal publicity and seldom interviewed ~xcept about his art (and for this book), he would much prefer to be invisible, and he in fact almost is. ”The lowest profile,” he contends, ”is the very best to have.”

Although he seems scarcely aware of it, Thomson is caught in a time warp between the high-tech world of his communications conglomerate and the unbending Baptist ethic of rural Ontario where he simmered up. ”We were raised on the principle that you kept yourself to yourself and that only the members of your close family were your true friends,” recalls his niece Sherry Brydson, who grew up with Ken. ”You played it close to YOUNG KEN 493.

your chest and believed that only with family could you let your hair down.

Ken has taken it a step further. He's got to the point where he doesn't let his hair down with anybody.”

Thomson, even in his dealings with longtime business colleagues, demonstrates that air of impenetrable reserve. It is entirely in character that his office, on the top floor of the Thomson Building at the corner of Queen and Bay streets in downtown Toronto, has a vertical moat. Public elevators run to the twenty-fourth floor, but only pre-screened and thoroughly vouched-for visitors are allowed into the private elevator that ascends to the twenty-fifth level, shared by Ken Thomson and John Tory, his chief corporate strategist. Thomson's office houses part of his art collection, including most of the 204 canvases b~ the Dutch-Canadian artist Cornelius Krieghoff that he owns-hanging there, looking about as comfortable as nuns in a discoth~que.

G athering Krieghoffs is Ken Thomson's most visible dedication, but his real cultural hero is a somewhat less exalted artist in a very different discipline: Clarence Eugene ”flank” Snow, the Nova Scotia-born country singer. Thomson regularly visits flank at the G rand Ole Opry in Nashville, owns all his records, has been to Snow's house in 'rennessee, and once presented him with a gold Hamilton pocket-watch that had been a family heirloom.

Ken Thomsons psyche is so difficult to penetrate because he behaves like an accomplished actor, able to detach himself from whatever crisis might be occupying his mind. Occasionally, very occasionally, a show of pa.s.sion will flicker across his shuttered face, only to be withdrawn quickly, like a turtle's head back into its protective sh.e.l.l. Exceptions to his customary reticence come unexpectedly.

494 FAREWELL TO GLORY.

Ken Thomson and his hero Hank Snow (centre)

A FEW SEASONS AGO, Posy Chisholm, a sophisticated and vivacious Toronto socialite who looks smas.h.i.+ng in hats, has a profoundly developed sense of the absurd and possesses a remarkable memory, found herself at Heathrow, about to board British Airways Flight 93 to Toronto. When she spotted Ken, the two acquaintances decided to travel together, though Chisholm had to trade down a cla.s.s, wondering why Thomson was too cheap to travel in style and comfort.