carefully. “I need your advice.”
“Whatever I can do,” I told her.
“I had breakfast with Tom last Thursday morning, the day before he died. He was worried—very worried—about something at the company.”
“I was scheduled to speak to him on Friday afternoon, but I didn’t know what it was about. He made the appointment with my secretary.”
My dealings with Grenthaler Media had been fairly limited of late. I’d assisted with the sale of a set of trade magazines the previous year, but it hadn’t been a particularly complex transaction, and I’d shepherded it to closing with no major problems. I’d appreciated that Tom had trusted Nancy Sloan and her faith in my ability to handle the deal without more senior supervision from Winslow, Brown. Many of our clients felt that they deserved to see a little more gray hair on the bankers who would be collecting hefty fees from the transactions they handled.
“I know. He thought you might be able to help.”
“Help with what?”
“Tom thought that someone might be buying up our stock in the market. He’d noticed the price had been up a bit—even though there had been no recent announcements that would explain any movement.”
I thought for a moment before responding. “I noticed the price increase. But the market as a whole has been pretty volatile. And even if Grenthaler hasn’t made any announcements, announcements by competitors or suppliers or a whole host of other factors could account for the uptick.” When a company announced shifts in strategy or operations, it could alter the public’s expectation for future performance, thus causing swings in the stock price. Moves by a competitor or a supplier could affect the price as well.
“I told Tom that it probably didn’t mean anything. But he was also concerned about the volume of trading. He thought it was unusually high.”
“Given that less than half of Grenthaler’s stock trades publicly, even a small bit of trading looks like a major increase in the number of shares changing hands,” I replied.
Sara controlled thirty-one percent and Tom Barnett controlled twenty percent of Grenthaler’s four million shares outstanding. Only the remaining forty-nine percent—about two million shares—traded publicly. Each share was worth approximately $250, which valued the company as a whole at one billion dollars. The relatively small number of publicly traded shares meant that only an incremental few thousand shares had to change hands to create a spike in the usual trading volume.
Sara nodded in agreement. “I know that it’s hard to draw conclusions from the trading volume, but Tom was still concerned.”
Now my curiosity was officially piqued. “That somebody might launch a takeover?”
“No, it wasn’t that. I mean, nobody could gain control of the company without buying shares from either me or Tom. He was just worried about someone else becoming a significant power in the company—even with a minority stake somebody can still start changing the composition of the board and influencing company strategy.”
“That would have to be a pretty significant minority stake,” I pointed out. “The investor would need to have at least twenty or twenty-five percent of the company to exert that sort of influence, and he would have to make a public disclosure to the Securities and Exchange Commission regarding his intentions once he reached five percent. Nobody’s reached that threshold.” But even as I was saying this, I began to wonder if Tom had been right to be concerned.
“That’s true. But it still makes me nervous. Especially now that Tom is dead.”
I had the feeling I knew where she was heading. “Would Barbara sell Tom’s shares?” Barbara was Tom Barnett’s widow.
“I don’t think so, but I’m not sure. When they read Tom’s will on Monday, she seemed surprised that he had only left her half his shares and that the other half reverted back to me. I thought she already knew that was the arrangement Tom made with my father years ago, before the company went public. But she’s always wanted Adam to be more involved in the business, and maybe she was hoping that if she had more control she could make that happen.” Tom had adopted Adam, Barbara’s son from her first marriage, when he married Barbara.
“What do you think?”
“I think that Tom didn’t want Adam to work at Grenthaler. He and my father agreed that I would take it over one day, and he didn’t think Adam would be a good fit there, anyhow. He’s much better off where he is.” Adam had worked for an investment company in Boston but had recently opened his own firm. I would bet that he was a superlative number cruncher, but I doubted he had the strategic vision or management skills to lead Grenthaler Media.
“What does Adam want?”
“Who knows what Adam wants? He’s so weird. At least he’s given up on trying to date me.”
I had to laugh. “Adam tried to date you?” Tom had invited me to dinner at his house while I was in town working on Grenthaler business, so I’d met Adam on a couple of occasions. He’d struck me then as a quintessential dork, the sort of guy who was more likely to spend his free time playing Dungeons & Dragons than man-about-town. He and Sara would have made a highly improbable couple.
“I know, it’s ridiculous. But he finally got the message. I wouldn’t be surprised if Barbara put him up to it—she has a blind spot where Adam’s concerned. She thinks he’s a genius.” I’d met Barbara, too, at those dinners, as well as at Grenthaler board meetings, and she was a piece of work, to put it mildly. Her most distinguishing feature, in my eyes at least, was that she’d been Miss Texas in the early seventies, and a close runner-up for the Miss America title. Thirty years later, she still had the perky blond looks and theatrical presence of a pageant contestant, although her aesthetic sense seemed to have stopped evolving at some point in the late eighties. Her marriage to Tom had always been a bit of a mystery to me—she seemed too ditzy for him, and he too staid for her—but she seemed to adore him, and by all appearances he’d been a good husband to her and a good father to her son.
“Does Barbara need to sell her shares? Does she need cash?”
Sara shook her head. “I can’t imagine that she would need anything. The dividends from ten percent of the company should provide a sizable income. She has more money than she could ever begin to spend.”
“Have you spoken to her about it?”
“No. Monday didn’t seem like the right time, and things have probably been so hectic for her, planning the memorial service and everything.” She hesitated again. “I was actually hoping that you might talk to her for me, to see what her intentions are.”
“What if she wants to sell?”
“Then I want to buy,” Sara replied without missing a beat. “My father trusted me with this company. It’s all I have left of him, and I refuse to let it go out of my control. In fact, even if Barbara doesn’t plan to sell, I want to figure out how to acquire another ten percent so that I will be the majority shareholder.”
“You would have to raise one hundred million dollars to do that,” I reminded her.
“I know. I thought you could help me figure it out. I have a trust fund from my parents, but it’s nowhere near big enough to help much.”
“Let me talk to Barbara. Maybe the two of you can work something out that would allow you eventually to own her shares without us having to find the cash up-front.” I wanted to talk to Barbara about as much as I wanted to go out with my grandmother’s dentist’s handsome associate, but Sara was a friend as well as a client.
“Thank you, Rachel. Maybe I’m overreacting—I hope I’m overreacting—but I can’t relax if I know that the company might get away from me somehow. I can’t let that happen.” Her gaze locked on mine.
“I won’t let that happen,” I promised her.
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