AS opponents of conglomerates tell it, the usual takeover scenario is a melodramatic affair involving a helpless target company and an unscrupulous interloper. The script has been scrambled in the case of Akron's B. F. Goodrich and its ardent but so far unsuccessful suitor, Northwest Industries. The rubber company's public relations and legal fight against Northwest's four-month-old takeover bid has been waged so well that, even though it is not yet over, it is looked upon as a classic corporate counteroffensive against an unwanted but aggressive merger partner.
Northwest President Ben Heineman appears to be a businessman at bay. Only hours before his conglomerate's annual meeting began in Chicago last week, the Justice Department announced that it would seek to block Northwest's bid for Goodrich. A stockholder at the meeting asked, why not just drop the whole thing? Nothing doing, replied Heineman. "I don't think I have ever been known as a summer soldier."
Venerable and Vulnerable. Heineman, 55, is the self-assured attorney who took over the wheezing Chicago and North Western Railway in 1956 and surprised skeptical industry veterans by turning the company into a moneymaker. Only four years ago, he began spreading into steel, clothing and chemicals, and later formed Northwest Industries, a holding company. Its sales rose impressively from $260 million in 1965 to $701 million in 1968.
Meanwhile, 99-year-old Goodrich, the nation's fourth largest rubber company, was taking a rather bumpy ride. Last year it earned only 3.9% on its $1.1 billion sales, lowest profit margin among the Big Four. Goodrich was obviously vulnerable to takeover because its ownership was widely scattered and the price-earnings ratio of its shares was relatively modest. It was not long before Goodrich began to draw the attention of a number of acquisitive companies, including Northwest. Goodrich Chairman Ward Keener, a onetime economics professor, began mapping defensive strategies as early as last June.
In March, Northwest revised its January proposal and offered a complex package of debentures, preferred stock and warrants, then worth about $75, for a share of Goodrich ($50). Keener, who dismissed what he called a "funny money" offer, had assembled a potent band of allies. For legal advice, he had White & Case, the Manhattan firm that masterminded American Broadcasting's successful defense against Howard Hughes last year. As investment bankers, he had First Boston Corp. To burnish Goodrich's image, Keener used three public relations firms, among them Hill & Knowlton, the world's biggest.
The defenders have waged a well-coordinated campaign. Items:
> To sway Goodrich shareholders, costly advertisements passed the word that not only was Northwest attempting to swallow a much larger company, but it had also reported a first-quarter loss of $3.9 million. Recent ads pointed out that Northwest's stock had dropped from $140 in January, to 81¾ last week, with the result that Heineman's generous original package offer for one share of Goodrich was now worth about $10 less. (Goodrich stock closed last week at 44⅞)