Back to Beer...and Hockey by Helen Antoniou
Author:Helen Antoniou
Language: eng
Format: epub
Publisher: MQUP
Published: 2018-04-25T04:00:00+00:00
By May 1997, all the pieces were in place – new directors, new board structure, new CEO. Eric hoped this was enough to galvanize change. Nonetheless, there were roadblocks, and some were internal to TMCL. Head-office executives were aware that if the company got rid of all its non-beer assets, it would no longer need the elaborate TMCL headquarters. The brewery already had, for example, its own finance, HR, communications, and strategy people. Those in the Toronto Scotia Plaza would become redundant, and a whole organizational layer would naturally disappear.
Eric identifies two players as particularly resistant: Stuart L. Hartley, the company’s CFO, and Brian H. Crombie, senior vice-president of corporate finance. “Hartley kept giving us information that would prevent us from making decisions. He would refuse to give any indication of why we should go fully back into the beer business. In fact, he kept showing us that we’d be fools to do it.”
Arnett acknowledges that when he started in May 1997, the expectation was that he make a clean sweep in TMCL’s top management. “Eric and the board probably thought the first thing I would do as CEO was fire Hartley. But I didn’t. I kept Hartley for a year and a half after I started, because I needed him. He was really smart and he knew where all the bodies were buried. He understood the company and knew how to handle the financing and accounting issues in terms of selling off the stuff and winding it up. So I made the decision early on to use him. I’m not sure Eric thought that was the right decision, but it’s what I chose to do.”
Arnett and his chairman also differed on how quickly they thought the company’s new strategic direction could be implemented. “‘Get back to beer’ sounds simple enough,” says Arnett, “but remember, we owned only 40 per cent of Molson Breweries at the time. So even though my first objective was to get 100 per cent ownership of Molson Breweries, it wasn’t at all clear that it was possible.” As Brian Crombie told reporters at the time, referring to the 60 per cent of the brewery owned by Foster’s and Miller, “Who knows whether it will be available, and who knows whether it will be available at an attractive price?”
In the meantime, the company still had an enormous cash pile from the sale of Diversey, so the pressure to do a share buy-back or give a special dividend remained constant. Arnett tried to buy time with analysts. “Trust me,” he urged, before explaining the plan to buy back the brewery. The company’s stock, however, was about 30 per cent lower than it was trading five years before. Time was running out.
Arnett reached out to Miller. They were open to sell their 20 per cent stake in Molson, but negotiations were complex. There was the sticky issue of price, and they also had to figure out how to continue licensing each other’s products in their home markets. The latter was made more complicated by TMCL’s ongoing discussions with Coors.
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