To win the company that he coveted Richard Oster had to make its owners believe that what was good for him was right for them. Chris Blackhurst charts the plot.
There is something endearing about Richard Oster, the 56-year-old new chief executive of Cookson Group, the industrial materials group. A chubby, larger-than-life American, his appearance and heart-on-sleeve way of talking are terribly un-British. His conversation is punctuated with sayings that would make the average British chief executive squirm, such as "I'm honoured that the Cookson baton of culture and integrity has passed to me". But anyone who dismisses his homely style as that of a folksy American lightweight is making a big mistake. Oster is the man who did a deal with Sir Owen Green, the man who masterminded the rise of BTR, and won.
In the early 1980s, his family's metal business having been acquired by Cookson, Oster was working in Providence, Rhode Island, as president of Cookson America. His brief was to expand it into fast-growing areas like electronics materials. A company called Alpha Metals suited. Based in New Jersey, it was a leading manufacturer of soldering metals, wires, coatings and chemicals for electronic chips and circuit boards. But in 1982 Alpha was bought by Thomas Tilling. Then, in 1983, after a ferocious battle, Tilling was bought by BTR. Oster determined to prise Alpha away from BTR. "Owen Green announced BTR had bought Tilling and none of its businesses would be sold. It was a nice challenge."
He set out to persuade Green to sell. BTR had an office in the same building in Providence as Cookson America. Shortly after the takeover Oster met John Cahill, BTR's US chief. Oster proposed "a joint venture" between Alpha and Fry's, a Cookson company. "It was not what I had in mind but it opened up the conversation." Oster knew that Stuart Carlton, the head of Alpha, and Cahill did not get on, so he invited the two of them to dinner at his house. "They hated each other. But to make sure, I sat them opposite each other. I asked Carlton a question which I knew Cahill would not like the answer to, and vice versa."
Oster seized his chance. First he persuaded Carlton (who was to resign soon afterwards) and Cahill that Alpha was not a high-tech business. Then he made Carlton believe that unless Alpha had a joint venture its business would not grow. Finally, he convinced Cahill that the shareholders of BTR would not be best served by hanging on to it. The meal had the desired effect. "It opened the door to Alpha." Oster was invited to London to explain to Green, Cahill and their colleagues how the joint venture would work.
The presentation was deliberately over-complicated. "You could say I dazzled with my footwork and blinded them with my science." Oster lulled the BTR men into thinking that Alpha was primarily a commodity business and subject to the cyclical price swings of the world metals markets. Unpredictability did not conform to the carefully mapped out BTR way of doing things. Alpha, they thought, made a much better fit with Cookson than BTR.
Green responded as Oster had hoped: "He said: 'If Alpha is so good, why don't you buy it?'" Forty eight hours of negotiation later, and just four months after BTR had bought Tilling, a deal was struck: Alpha was Cookson's. Oster knew what to do. Alpha's budgetary controls and reporting lines were tightened, research boosted, management given generous incentives, and the company expanded. In 1974 Alpha had sold half of its Hong Kong operation. With the Far East dominating the world consumer electronics industry, Oster bought it back.
Alpha expanded. In Taiwan two local rivals were bought, giving Alpha 65% of one of the biggest electronics markets in the world. In Hong Kong a new $10 million plant was added. In Singapore a distribution centre was opened. In Korea the existing factory was trebled in size. In China, Alpha was the first company to enter into a joint venture to manufacture electronics materials. In the US, Alpha soon purchased a competitor, Kenco. In Italy a new plant was built.
In 1983 Alpha was earning $58 million a year. Today its profits are 500% higher. It is number one in electronics materials in Hong Kong, Taiwan, China, Europe and the US, number two in Korea and Singapore and one of the big players in Japan.
Oster is generous about Green and Cahill. "I would not want to play poker with those guys. They could have two aces in the hole and you wouldn't know it. They were superb." And, he stresses, in that BTR did not want the company, "both sides won, and that is the essence of a good deal".
There is a more telling indicator of who won and lost. Oster and Cahill are still friends. When they meet, Alpha is never mentioned.
(Chris Blackhurst is City editor of the Sunday Express.)