Word: express
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Dates: during 1970-1979
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Shooting it out for McGraw-Hill and American Express...
...McGraw, 61, chairman of McGraw-Hill. Robinson brought with him Amexco President Roger Morley, who is also a McGraw-Hill director; Morley earlier had dropped some hints of Amexco's interest, but they were so subtle that McGraw may have failed to pick them up. The two American Express chiefs gave McGraw a letter proposing that Amexco buy all of McGraw-Hill's stock for $830 million in cash, or cash and Amexco stock if McGraw-Hill stockholders preferred, and run McGraw-Hill as a subsidiary without changing the management. Morley accompanied that with a letter resigning from...
...side, American Express enlisted the aid of the Lazard Frères investment banking firm, and Lazard in turn engaged Joseph Flom, a lawyer famed for his skill in fighting long delaying actions against takeovers and thus an expert on how to counteract such tactics. American Express further arranged $700 million in stand-by credits from major banks. It obviously does not need the money, but might prefer to borrow for the takeover rather than cash in some high-yielding securities...
...American Express has reason to persist and even to raise its offer. Under Howard L. Clark, who was chairman from 1960 through early 1977, revenues soared from $75 million to $3.4 billion, and profits hit $262 million. Growth has continued under new Chairman Robinson, the workaholic scion of an Atlanta banking family and protégé of Family Friend Clark. But Amexco has largely saturated the market for high-income holders of credit cards, and competitor Visa and some major banks are also trying to sell their own traveler's checks. Earnings from Fireman's Fund Insurance...
...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...