Erick was silent, sensing that Densby knew exactly where he was steering this conversation.
‘GIANT of Scandinavia was a brilliant idea, though in reality it is still a very young company and I am aware that you are underfinanced. You would do better with some real financial muscle behind you, something I think you deserve, but our banks don’t support such risky ventures. Other Danish companies your size have secure capital bases and are seen as much safer investment propositions.’
Erick nodded thoughtfully, unwilling to confirm or deny anything his visitor said.
‘An idea has occurred to me which perhaps may solve your problems,’ Densby went on, ‘and at the same time would be of financial benefit to my own company. But I wanted to sound you out personally. I thought it prudent to hear your opinion first. In other words, Mr Elgberg, if you do not like my idea, we will not take it further and I will not bother you again.’
‘I’m intrigued. And, please call me Erick.’
Densby inclined his head. ‘I felt GIANT was such a splendid idea that my firm invested a considerable sum of money in another company; not GIANT of Scandinavia, I hasten to add. In a minute I will know if I made a sound investment.’
Erick frowned. ‘What has this to do with me?’
Densby laughed. ‘I invested in Combined Danish Cotton Mills, and now I want to sell you fifty‑one per cent of its shares.’ He sat back, beaming, eyes fixed on Erick’s face, evidently enjoying the impression his words had on the younger man.
Erick’s mind was in turmoil. CDCM, as the company was known, was a much larger company than GIANT. Two hundred and fifty years old, it was regarded almost as an institution, although no longer the force in the market that it once had been.
‘Before you say anything, let me explain. The cotton products CDCM manufacture can only partly be used by GIANT of Scandinavia, but you could put life back into the sleeping lion and GIANT would be helped right away financially. CDCM is a very wealthy company. It owns valuable properties in Copenhagen and has substantial funds in its own right, as well as shares in several other public companies. Besides this, it is quoted on the Stock Exchange, which means you could raise capital for any future expansion of GIANT.’
Per Densby stopped to give Erick a chance to assimilate all this information.
‘If you know so much about us,’ Erick said slowly, ‘how do you see us paying for the controlling interest in CDCM? It has to be worth far more than we can afford.’
Per Densby opened his briefcase. It contained two matchboxes of different sizes, two blank pieces of paper, and a coin. He spread them out on the desk.
‘This large matchbox,’ he said, pointing to it, ‘is CDCM.’ He wrote the initials on the box. ‘As you can see, it is full. Each match representing a considerable sum of money.’
‘I’m with you so far.’
‘This smaller box,’ Densbsy went on, ‘does not contain so many matches, because it does not have so much capital. What it does have is vitality, youth, vision. So we will put a coin in, to symbolise these assets.’ He wrote GIANT in capital letters on the small box and placed beside the one marked CDCM.
‘There are two other parties involved, namely your board, which owns all the GIANT shares, and myself, who owns fifty‑one per cent of CDCM shares.’ He took the two pieces of paper and wrote ‘GIANT shareholders’ on one and ‘Densby’ on the other and placed them beside the matchboxes.
‘What we do now is sell GIANT of Scandinavia to CDCM for, let us say, nine matches. As GIANT was owned by its shareholders, these shareholders now own the nine matches instead.’ He took nine matches out of the big box and placed them on the ‘GIANT shareholders’ paper. Then he put the small matchbox into the larger matchbox marked CDCM. ‘Now GIANT is owned fully and irrevocably by CDCM.’
‘I understand,’ Erick told him.
‘The shareholders of GIANT of Scandinavia, who now have nine matches in the bank, then decide to buy Per Densby’s majority in CDCM for the nine matches.’ He moved the nine matches from ‘GIANT shareholders’ on to the ‘Densby’ paper.’ As GIANT’s shareholders have now bought the majority of shares in CDCM, they control it.’ He moved the big box over to the GIANT shareholders’ paper. ‘Everyone is happy.’ He leaned back. ‘Did you follow all that, Erick?’
‘Yes. But there’s one problem: who can say what GIANT is worth?’
‘That’s why I put the coin in the box. What is its true value? The answer is: what someone is willing to pay.’
‘And what is that?’
‘The CDCM board must decide if they want to buy GIANT at the nominated price. However, you just gained control of the CDCM board ten seconds ago!’
Erick gasped. The concept was brilliantly simple. Densby had explained his plan in less than half an hour. His proposal was a bigger venture by far even than the foundation of GIANT of Scandinavia. ‘I must think about this,’ Erick said cautiously, though his brain was teeming with ideas.
‘Of course.’ Densby got to his feet. ‘But before I go, do you think my idea is good?’
‘I think it’s terrific!’
‘We have a deal then?’ Densby held out his hand.
‘I have to get my board’s approval.’
‘Ah, but you and I know that’s just a formality. I’ve heard that Erick Elgberg can sell anybody anything!’
* * *
At home he told the whole story to Andrea, illustrating the idea as Densby had done with the matchboxes. She was impressed, and urged him to push it through.
The next day, Erick explained to Jan what had transpired between him and Per Densby.
Jan was impressed in spite of himself. ‘He’s suggesting a reverse takeover. But why doesn’t he want to keep control, even with us on board?’
‘He’s getting old, perhaps. Doesn’t want all the hassle. And he’s probably content just to make a tidy profit on the sale of his shares.’
With Jan’s agreement, they decided to talk to Aage Madsen who quickly realised that, with CDCM’s large resources behind them, GIANT’s cash flow problems would be solved.
Next day Erick phoned Per Densby’s office and a meeting was arranged for seven o’clock the same evening between Erick, Jan, Madsen and Densby. Two board meetings later, they met again in the company of Densby’s lawyer and two senior partners of Faberson & Jeppesen, GIANT’s legal advisers. All the documents creating the new merger were signed the same evening. It was agreed that Jan would become Financial Director, Erick Managing Director and Aage Madsen Group Chairman. The new company to be known as GIANT‑CDCM LTD.
The media were informed of the merger at a press conference held at Tre Falke. Interest was intense. There had never been anything on this scale in Denmark. Within two years, GIANT had come from nothing to being the tenth largest company in the country, employing over five thousand people in twenty factories. GIANT‑CDCM was now a public company, quoted on the Danish Stock Exchange.
Questions were fired at the four men who sat facing the journalists and television cameras. Near the end of the meeting the presenter of a respected business programme asked the one question on everyone’s mind.
‘How was this transaction financed? Through Danish banks or foreign institutions?’
Aage Madsen rose to his feet. He glanced at Densby, shuffled his papers and waited until the room was absolutely silent. Then he said, ‘Can I quote a well‑known rhyme by Piet Hein?
‘“Little cat on the road, whose are you?”’ He paused, then said, ‘“I am bloody well my own!”’
The press roared with laughter and the rhyme made headlines next day in all the newspapers.
The next morning Jan and Erick arrived at the head office of CDCM in Aalborg, Jutland. They were introduced to the directors and shown round the huge factory.
CDCM’s Managing Director, Knud Bechman, was seventy years old and had given notice of his retirement some months ago. The company was to pay him a considerable bonus and a generous pension. Neither Ja
n nor Erick were against this.
‘I offered Densby my two thousand CDCM shares at a price of two hundred and fifty kroner each,’ Bechman told Erick. ‘I was rather disappointed not to have heard from him.’
Erick was puzzled. If Densby had not been willing to pay that price, it could only mean that he had bought shares at a lower figure or else had secretly controlled a majority for many years.
‘I can’t answer for Densby regarding your shares,’ Erick replied, ‘but I hope the agreed bonus and pension will be adequate for you and your family?’
‘Oh, yes. I’m sorry to have mentioned my personal worries. I’ll be here tomorrow to make my farewells, if that’s OK with you?’
* * *
Early in December Jan hurried into Erick’s office, his face more than usually sombre. ‘I’ve just had a phone call from Faberson. He’s saying that Knud Bechman has complained he wasn’t offered the same price for his shares as the one Densby sold at to us. He seem to think we were obliged to buy his shares also. Do you know anything about this?’
Erick said carefully, ‘If there’s a problem, tell Bechman to take it up with Densby. It’s nothing to do with us.’
‘There’s something else. Bechman’s put his lawyer on to it. Guess who he is?’ When Erick said nothing, Jan went on, ‘Janus Kirk! Surely you’ve heard of Solicitor Kirk!’
‘No,’ Erick said. ‘Never. Enlighten me.’
‘He’s a High Court solicitor, the most unpopular in the legal profession. Added to which, he’s an ugly little sod with a lisp and showers you with spit every time he opens his mouth.’
‘Charming.’
‘He also owns Europe’s most valuable collection of paintings and drawings by artists like Beardsley, Ballivet, Grevedon, von Bayros.’
‘Never heard of them.’
‘All masters of erotic art.’
‘Really?’
‘If he’s involved,’ Jan said anxiously, ‘we could be in deep trouble. His office is called the Coffin in the legal profession because it is so dark and because his speciality is bankruptcy and liquidation. That’s all he does. Day in and day out. Why would he have taken Bechman’s case if everything were legally correct, as Densby and our solicitors assured us? I think he can smell a company with a serious problem.’
This was obviously worrying Jan, even though Erick could not see how the price Densby had paid for the shares had anything to do with them. Densby had bought them and sold them on to GIANT. What could be more straightforward?
In April 1969 Jan’s secretary Kirsten asked Erick to take an important telephone call for her boss, whom she could not locate. The call was from GIANT’s bank manager.
‘We’ve got a problem. As I was unable to get hold of Mr Christensen, I thought I’d better inform you. My head office just asked me for an up‑to‑date balance on your overdraft. It’s just under the agreed limit of two million kroner, but my superiors say we won’t honour any more cheques until the overdraft is cleared completely.’
‘You should really talk to our Financial Director about this...’
‘But he’s unavailable,’ the bank manager said. ‘And if your cheques aren’t paid, you’re in for some seriously damaging publicity.’
‘This is completely ridiculous!’ Erick suddenly realised the implications of what he was being told. ‘You can’t just phone us out of the blue and withdraw our overdraft! Give us a few days at least to arrange something.’
‘It’s not my decision, Mr Elgberg. It was decided by the bank’s board this morning.’
Erick suddenly shivered. This sounded like a total disaster.
‘Why? What possible reason could they have to pull the plug on us like this?’
The manager hesitated then said, ‘We have some information about your company, but don’t quote me on that.’
‘What information?’
‘I’m not at liberty to divulge,’ the manager said, ‘I’m sorry, Mr Elgberg.’ He hung up.
Erick asked Kirsten to find Jan urgently.
‘Where the hell have you been?’ Erick demanded angrily, when he appeared. ‘We’ve got a critical situation here.’
He recounted his conversation with the bank manager. ‘Have you any idea what information he could have meant?’
Silently, Jan took a chequebook from his briefcase and showed it to Erick. It was CDCM’s chequebook. He wrote a cheque to GIANT of Scandinavia for two million five hundred thousand kroner. Then he called in Kirsten.
‘Please telephone the bank and tell them the cheque is on its way.’
‘I’ll write directly to the head office and arrange a meeting,’ Jan said. ‘We’ll try a damage limitation exercise. It’s all the fault of that blasted Knud Bechman!’
‘Bechman? But I thought that was all settled?’ Erick looked hard at his Financial Director. ‘Is there something you haven’t told me?’
Jan sighed. ‘There’s a possibility that Faberson & Jeppesen could have given us wrong advice. And Densby should have put us fully in the picture by informing us that by rights we should have offered the same price for which we bought his shares to each and every one of the remaining shareholders.’
Erick digested this information. ‘Are you saying he led us into the deal, knowing we could face a second massive pay out to the minority shareholders?’
‘It’s my guess now that he badly needed to make a deal very quickly. Perhaps his own company was in trouble or something and he had to cover a massive hole somewhere in his accounts. Whatever, his first concern was selling his fifty‑one per cent.’
‘Why didn’t Faberson tell us we should have paid the same price for all the shares?’ Erick demanded.
‘He always insisted that legally we didn’t have to make the same offer to every shareholder. We bought Densby’s shares out of his own company. That was different from picking them up via the Stock Exchange. Faberson says there’s a possibility of a legal dispute, although in practice there’s never been a civil court case about anything like this before.’
‘This is unbelievable.’ Erick knew they could not go back on the CDCM deal without losing everything. They could not afford to buy the remaining forty‑nine percent at the same price they had paid for the majority. It would create a massive loss as the shares were quoted much lower on the Stock Exchange. They knew all that they had paid over the top because it was a majority. Densby had got what he wanted then left them to deal with the consequences.
The next morning, Erick was having breakfast with Andrea and the children. The radio was playing Mary Hopkins’ hit ‘Those Were The Days’, when their daily newspaper, Berlingske Tidende, rattled through the door.
Andrea picked it up and handed it to him. ‘You’d better sit down and read this.’
On the front page was the banner headline:
‘DID GIANT OF SCANDINAVIA DECEIVE
THE MINORITY SHAREHOLDERS OF CDCM?’
* * *
‘Deception!’ Erick waved the newspaper under Jan’s nose. ‘It suggests we’ve done something criminal. How dare they write that? I don’t think we can go on taking this nonsense without doing something about it.’
‘It could blow over,’ Jan suggested, sounding unconvinced.
‘We must have a meeting with Faberson. Then we’ll have to find the best legal specialist in this field and hit back as hard as we can.’
The Copenhagen offices of Faberson & Jeppesen were on a corner overlooking Kongens Nytorv. Erick, Jan and Aage Madsen were asked to go directly into a conference room where several people were gathered.
Faberson started the meeting. ‘The main problem in this whole tangle is not the minority shareholders but one person, namely Janus Kirk. If he were not on the scene we could reach an agreement with the shareholders within a few days and that would be the end of it. But the situation is now much worse than it was before, as Kirk is claiming that the price CDCM paid for GIANT was fictitious. This elevates the whole matter from a mere legal dispute between sha
reholders to a potentially criminal one.’
Erick sprang up. ‘A criminal matter? You’re our legal adviser! Why didn’t you warn us about this? No one ever raised the question of the minority shareholders.’ He breathed heavily, gathering his thoughts. ‘Can’t we arrange a meeting with this Kirk?’
‘No, he’s flatly refused. He’s now officially representing a large number of the forty‑nine per cent minority shareholders in CDCM and could go to the court for a ruling that the majority is not allowed to vote. He wants to press as hard as he can for a situation where GIANT is forced into collapse and he being appointed the liquidator.’
Faberson shook his head. ‘This is what he is good at. He’s a complicated and dangerous man.’
‘So what do we do?’ asked Madsen.
‘The obvious solution is to get rid of Kirk.’
‘And how do you suggest we do that?’ Erick asked, trying to keep the heavy sarcasm out of his voice.
Faberson seemed to crumple under his steady gaze. ‘To be frank, at this moment I don’t see how we can do it.’
The atmosphere in the room was becoming claustrophobic. Erick had to get out. He had to think.
He walked over Kongens Nytorv and into Nyhavn where he sat in one of the small restaurants frequented by sailors and ordered a whisky.
A few minutes later he got up, leaving his drink unfinished, and walked quickly through the maze of narrow streets until he stood outside a door beside which a polished brass plate bore the words of ‘JANUS KIRK, Solicitor for the High Court’.
He told an elderly secretary that he was prepared to wait until Mr Kirk could see him. She disappeared and came back almost immediately, showing him into an office.
The room was dark, with curtains drawn although it was still light outside. It was full of legal text books, sombre paintings and four large mahogany cabinets with numerous slim drawers. The smell of stale cigars pervaded the room. Erick now understood why Kirk’s office was known as ‘the Coffin’.
Kirk himself lived up to Jan’s unflattering description. ‘What can I do for you?’ he said from behind his desk, a small, bald weasel of a man to whom Erick took an instant dislike.
He began in a businesslike tone. ‘I’ve come here to put a proposition to you. Would you, on behalf of your clients, accept an offer to pay them the same price as GIANT paid Densby, spread over the next two years? We will, of course, also honour your costs.’