The Great Glass Battle

For weeks the walls of Paris and the sides of its ancient buses had been plastered with huge red posters bearing the reassuring message: "Saint-Gobain . . . a trustworthy trademark." Day after day, France's most aristocratic company, which was set up in 1665 by Louis XIV to make the glass for Versailles, blared its virtues in unheard-of fashion for French corporations--double-truck newspaper ads, regular radio and television appearances. Since Christmas, France has experienced what in the business world is something like the student-worker upheaval of last May and June. Compagnie de Saint-Gobain, Europe's largest--and by any measure its proudest --glass manufacturer, was fighting for its corporate life. Still more astonishing, it was battling against an American-style takeover attempt by a much smaller competitor, Boussois Souchon Neuvesel. Last week the great glass battle ended with Saint-Gobain overpowering the upstart by sheer financial force.

Frontal Attack. Superficially, BSN's attempt looked absurd. Saint-Gobain produces 22% of the world's plate glass, has extensive interests in chemicals, nuclear energy, cardboard and paper. The company has annual sales of glass and other products totaling $1 billion, almost five times BSN's. But Saint-Gobain's current reputation glitters less than its history. Under the presidency of Count Arnaud de Voguee, 64, the company lagged behind BSN in adopting the float-glass process that revolutionized glassmaking a decade ago. On the other hand, BSN, which was formed when two firms merged in 1966, had eagerly adopted new management and production techniques under its wiry president, Antoine Riboud, 50, who advocates an aggressive French business policy to combat growing competition from the U.S. and elsewhere.

Rebuffed in merger feelers toward Saint-Gobain, BSN quietly bought 10% of its competitor's 11.5 million shares. Then, in December, Riboud sprang his frontal attack. Backed by three big banking houses, BSN offered to exchange convertible debentures with a face value of $46 for Saint-Gobain common stock, then selling for $29. Such tactics, common in the U.S. and Great Britain, had never before been tried in France. Much to BSN's surprise, Saint-Gobain did not take long to fight back strongly.

As the rivals fired public-relations broadsides at each other, Voguee dropped Saint-Gobain's traditional secrecy about company finances and prospects and wooed its long-ignored and meagerly rewarded stockholders with good news. He promised a 25% stock dividend and predicted that profits would double by 1971 to $50 million. His unprecedented Sunday open house drew tens of thousands of fascinated Frenchmen to S-G plants all over France.

Mysterious Friends. BSN was not defeated, however, by Voguee's $1,000,000 massive public-relations effort, but by mysterious Saint-Gobain "friends" with strong financial connections abroad. As soon as BSN announced its bid, Voguee's allies started buying Saint-Gobain stock. In five weeks, some 4,600,000 Saint-Gobain shares changed hands at prices that climbed all the way to $48. Voguee's "friends" paid $180 million for 3,500,000 shares, bringing their holdings to 42% of the company's stock, more than enough to assure Voguee's continued control.

The unexpected Saint-Gobain defense prompted BSN accusations that the company itself had illegally financed the purchases. Although Voguee denied any wrongdoing, French Premier Maurice Couve de Murville ordered two quiet government investigations. No matter what the outcome of the inquiries, the battle itself has put French businessmen on notice that the old days of secrecy, silence and short-changed stockholders have faded. From now on, even the most tradition-steeped French managements will have to produce results in the profit column or face the possibility of another such flamboyant takeover attempt.

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