Word: amexco
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...Amexco initially seemed likely to win. But its managers appeared stunned by the fury of McGraw-Hill Chairman Harold McGraw Jr.'s attacks on Amexco's "corporate morality" and unwilling to take the chance that further such assaults would blacken its reputation during a drawnout struggle. At the start of the week, Amexco Chairman James D. Robinson III raised the company's bid for McGraw-Hill stock from $34 a share to $40, or a total of almost $1 billion in cash. But he promised not to make a tender offer to stockholders unless the majority...
...member McGraw-Hill board did the exact opposite. At a 3½-hour meeting that some present described as "intense," the directors voted unanimously to reject the $40 offer. McGraw apparently won unanimity by harping on his two main arguments: 1) that an Amexco takeover would undermine the editorial independence of McGraw-Hill publications, especially Business Week and the Standard & Poor's bond-rating service, and 2) that Amexco President Roger Morley had committed a "serious breach of trust" by serving as a McGraw-Hill director while Amexco was preparing its bid-a charge that McGraw repeated...
Though the chairman has called the Amexco bid illegal, Donald McGraw dis missed that charge as "a ploy that Harold is using to pass by the stockholders be cause he does not want to sell at any price...
McGraw called the Amexco bid "illegal, improper, unsolicited and surprising," and charged that Amexco "lacks the integrity, corporate morality and sensitivity to professional responsibility" essential to McGraw-Hill's operations. He claimed that Robinson had agreed last summer not to bid for McGraw-Hill after his informal overtures had been turned down, and that he was now guilty of "an unprecedented breach of trust." McGraw thundered that Morley, by continuing to sit on the McGraw-Hill board until the bid was made, "clearly violated his fiduciary duties to McGraw-Hill and the stockholders ... by misappropriating confidential information and conspiring...
Some McGraw-Hill employees fear that a takeover would cramp their editorial independence, though it is hard to see how Amexco would be different from any management, including the present one. In any case, those fears have an ironic ring. In a mostly laudatory cover story on Robinson and American Express ("a cash machine"), Business Week advised in its Dec. 19, 1977, issue that Amexco's "best response" to new competition would be "to look for additional products for its affluent market, or to find other businesses that fit [its] specialized mold." Little did the staff guess that their...