It's an anniversary no one on East Market Street in Akron - let alone anyone in Akron - wants to celebrate.
Nov. 20 marks 25 years since the face and make-up of Goodyear was
changed for all time after it had fended off a hostile takeover attempt
by British mogul Sir James Goldsmith. The 10-week long war – and it was
every bit a war – led to the dismantling of a highly diversified
Goodyear and cost the company a then-unbelievable, astronomical and damn
near bankrupting $2.62 billion in what was termed “green mail.”
I was working down the street at the time, just two years into my tire
journalist career, and ended up taking the lead on our coverage of
events. This was pre-everything, so there were no daily Internet
deadlines and news traveled slowly, even from down the street. I
remember having to buy up the local daily newspapers to tap their global
sources, and handle the endless stream of calls and faxes from
Goodyear’s then PR Army (supplemented with hired hands in D.C. and New
York City). In the end, we produced a huge story in the November issue,
and then it was over.
Goldsmith was among a handful of super-rich “investors” glamorized by
Gordon Gecko in the film “Wall Street.” The real greenmailers pulled off
hostile takeovers of innocent corporations, gutted the victims, and
left the remains to survive or die based on whim. Others included guys
like T. Boone Pickens and Carl Icahn, both of whom now enjoy more
polished reputations; back in the 1980s they were all poison. They
didn’t care about employees or shareholders or anything but their
vaults. Their plan was borrow a ton of money, buy up controlling
interest in a company, sell off assets to pay the debt and then pocket
the rest.
Goldsmith’s attack was as sudden as it was stunning, as he swooped in
and bought up all of the Goodyear stock he could lay his hands on,
putting himself squarely in the catbird’s seat. He badly wanted to buy
Goodyear and had $4.7 billion to spend.
But he didn’t want a seat on the board or a title. He wanted to strip
away Goodyear’s then most recent acquisition – Celeron Corp., an oil and
gas business that was working to build an oil pipeline that would
stretch from California to Texas. He wanted that pipeline, and figured
he could unload it for a king’s ransom.
The company had separate units involved in petrochemicals, aerospace,
wheels, conveyor belts, cars belts and hoses – and those business units
were fully 40% of the company. Too much, Goldsmith said, the focus
should be on tires.
What the man didn’t count on was a barroom brawl. Goodyear rallied its
forces – and hired all manner of lobbyists and PR pros and financial
wizards. They rallied the city of Akron, even their competition. They
rallied Congress and the president. They went to the mat and then some.
They called him names, questioned his heritage and honesty, they
attacked his wife, ex-wives and children, they did everything they could
think of to publicly embarrass and humiliate the usurper. All the
while, Goldsmith retained his calm but snarky look.
And they had one ace up their sleeve. U.S. Rep. John Seiberling (D) of
Akron was the grandson of Charles Seiberling, the silent partner
co-founder of Goodyear. Rep. Seiberling never worked a day for Goodyear,
turning his mind to government service and politics, but he was as
tough as any tirebuilder.
In the most memorable moment of the entire ordeal, Goldsmith was dragged
to testify to Congress in hastily called hearings about the deal, and
before him sat Rep. Seiberling and, by effect, the entire city of Akron.
As Goldsmith was explaining his plans, the Congressman interrupted, asking loudly, “My question is: Who the hell are you?”
That golden moment brought loud sustained applause. Even Goldsmith smiled and clapped. And knew then he was beaten.
It cost Goodyear $2.62 billion to buy Goldsmith off and send him on his
way, an expensive victory back when a billion dollars was a hell of a
lot of money. It was booty the pirate could only enjoy until 1997, when
he died at age 64 from a heart attack.
But Goldsmith’s attack did result in the tiremaker getting refocused on
tires, and within a short period Celeron and many of the other units
were sold off to pay the massive debt load. Gone were its blimp and
aerospace business, oil and gas reserves, Motor Wheel Corp., and a
resort and other properties in Goodyear, Ariz.
The mighty Goodyear was a shadow of itself, and in a lot of ways it still hasn’t recovered from that brutal financial attack.