WEBVTT - Anchor Hocking 0:00:04.120 --> 0:00:07.520 Welcome to Business on the Brink, a production from I 0:00:07.680 --> 0:00:14.680 Heart Radio and how stuff works. Sometimes a company just 0:00:14.840 --> 0:00:18.960 can't catch a break, particularly if everything they make is breakable. 0:00:19.079 --> 0:00:22.000 What might seem crystal clear one day could be cloudy 0:00:22.040 --> 0:00:25.000 the next. But rather than fall into a great depression, 0:00:25.200 --> 0:00:27.840 maybe it's possible to bubble up your troubles and make 0:00:27.880 --> 0:00:30.040 the best out of them. This is anchor Hawking on 0:00:30.160 --> 0:00:42.360 Business on the Brink. Everybody. I'm Jonathan Strickland and I'm 0:00:42.360 --> 0:00:46.640 Arial Casting, and today's episode is about anchor hawking, which 0:00:46.680 --> 0:00:48.800 I did not even know was a thing, but it 0:00:48.960 --> 0:00:52.720 was a request, right, It was from Kimberly Bostick. Yeah. 0:00:52.720 --> 0:00:55.560 An anchor hawking is not like, hey, folks, come see 0:00:55.560 --> 0:00:57.960 this great anchor over here on stage two. It's gonna 0:00:57.960 --> 0:01:01.160 do a performance for you. Extra x stra extra. It's 0:01:01.200 --> 0:01:04.680 actually a glass company. And I'll say, going into this, 0:01:05.160 --> 0:01:08.160 I was like, oh, okay, it's it's a glass company. 0:01:08.160 --> 0:01:11.480 It will be a little niche thing. Maybe we'll find 0:01:11.560 --> 0:01:14.200 one or two little points we can talk about. They've 0:01:14.200 --> 0:01:16.560 had a whole bunch of brink moments. Yeah. As it 0:01:16.600 --> 0:01:19.000 turns out, the entire history of this company, you could 0:01:19.120 --> 0:01:23.600 argue was a series of brink moments, and there were 0:01:23.600 --> 0:01:28.000 more than a few occasions where with just a little 0:01:28.080 --> 0:01:32.759 extra the company could have fizzled out of business. Yeah yeah, 0:01:32.880 --> 0:01:36.640 and yet they keep going. So we're gonna go ahead 0:01:36.640 --> 0:01:40.360 and get started. Yes, So the story of Anchor Hawking 0:01:40.520 --> 0:01:43.720 actually begins with an older company, a company that existed 0:01:43.760 --> 0:01:48.000 before that, and that was the Lancaster Carbon Company. I 0:01:48.040 --> 0:01:51.120 got all excited because I was thinking, like Lancaster, Pennsylvania, 0:01:51.400 --> 0:01:54.560 and I was thinking, it's gonna be about Amish. It's Lancaster, Ohio. 0:01:54.880 --> 0:01:57.920 Not that that's not exciting Ohio people, Yes it is. 0:01:58.040 --> 0:01:59.760 I just didn't know that that was a thing, and 0:02:00.000 --> 0:02:02.440 all I read about this, well, did you know, Um, 0:02:02.520 --> 0:02:04.400 I'm going to put a little fun fact in here. Okay, 0:02:04.520 --> 0:02:06.880 did you know what the nickname of the Lancaster Carbon 0:02:06.920 --> 0:02:10.480 Company was? What's that the black Cat because of all 0:02:10.520 --> 0:02:13.560 the carbon that would line the walls, right. Yes, they 0:02:13.600 --> 0:02:16.600 called their facility the black Cat because it was it 0:02:16.680 --> 0:02:19.480 was just coded in this because because of course, when 0:02:19.480 --> 0:02:22.680 you're making carbon or glass or anything like that, you're 0:02:22.720 --> 0:02:26.960 involving furnaces giving up a lot of smoke. So, uh, 0:02:27.360 --> 0:02:30.560 I don't know, a whole lot about the Lancaster Carbon Company. 0:02:30.600 --> 0:02:33.679 It's an older company that dated from the nineteenth century, 0:02:33.840 --> 0:02:36.400 but I don't know exactly when it was founded. It's 0:02:36.440 --> 0:02:39.239 one of those where I could not find any records 0:02:39.639 --> 0:02:41.880 about it. It's just it was just too small and 0:02:41.919 --> 0:02:44.160 too old for me to find. All I know is 0:02:44.160 --> 0:02:48.080 when it ended, which was that the company was in 0:02:48.160 --> 0:02:53.640 financial difficulty and it essentially went into receivership, meaning it 0:02:53.720 --> 0:02:58.760 was essentially under the control of somebody else after going 0:02:58.800 --> 0:03:02.480 through the bankruptcy process US. And so then you get 0:03:02.480 --> 0:03:07.080 a guy named Isaac J. Collins who got together with 0:03:07.200 --> 0:03:11.760 precisely six of his friends six. Wow. Every single source 0:03:11.800 --> 0:03:14.640 I saw it was always like Isaac J. Collins and 0:03:14.760 --> 0:03:19.360 six friends got together and they pulled their cash and 0:03:19.440 --> 0:03:24.480 they bought the Lancaster Carbon Company for the princely sum 0:03:24.520 --> 0:03:27.120 of eight thousand dollars. Yeah. In in case you guys 0:03:27.120 --> 0:03:30.639 are curious, that's about two hundred and thirty thousand dollars 0:03:30.680 --> 0:03:34.760 in today's money. Yes, yes, adjusting for inflation, it's nearly 0:03:34.760 --> 0:03:37.880 a quarter of a million dollars of a million. But 0:03:38.480 --> 0:03:41.200 here's the thing is that that still wasn't quite enough 0:03:41.240 --> 0:03:43.240 to get things up and running. That was enough to 0:03:43.760 --> 0:03:46.320 take it out of receivership, but they needed more for 0:03:46.400 --> 0:03:51.080 actual startup costs. So they turned to an investor named 0:03:51.160 --> 0:03:55.240 eb Good, who I think could play a guitar just 0:03:55.320 --> 0:03:57.120 like it was ringing a bell. I think it sounds 0:03:57.160 --> 0:04:00.520 like a Charles Dickens character. That's very similar. Yeah, And 0:04:00.600 --> 0:04:05.480 he ended up contributing another seventeen thousand dollars, so more 0:04:05.600 --> 0:04:08.520 than twice what that initial investment was, almost half a 0:04:08.560 --> 0:04:10.880 million in today's money. Yes, so now we're looking at 0:04:10.920 --> 0:04:14.400 maybe like three quarters of a million dollars almost for 0:04:14.480 --> 0:04:18.320 the full startup cost here. And that's when they formed 0:04:18.480 --> 0:04:22.239 the Hawking Glass Company, and it was named the Hawking 0:04:22.279 --> 0:04:26.160 Glass Company because it was near the Hawking River. Yeah, 0:04:26.200 --> 0:04:30.040 which again I before I read this, I just thought, wow, 0:04:30.760 --> 0:04:33.240 it's it's like that. I guess we can't call ourselves 0:04:33.279 --> 0:04:36.680 anchor Sellings. We're calling ourselves anchor Hawking. Well, they'll go 0:04:36.720 --> 0:04:38.800 through a bunch of name changes. But before that, in 0:04:38.800 --> 0:04:41.400 their first year of operation, the company produced and sold 0:04:41.680 --> 0:04:44.719 about twenty thousand dollars in glassware, which I did not 0:04:44.760 --> 0:04:47.960 adjust for inflation. But that's a whole lot of money. Yes, Uh, 0:04:48.440 --> 0:04:51.360 But they needed more money to scale it production. So 0:04:51.440 --> 0:04:54.039 Collins got another five thousand dollars of investment from a 0:04:54.040 --> 0:04:58.479 guy named Thomas Fulton, Yes, who became the secretary treasurer 0:04:58.560 --> 0:05:02.680 for the company. Yes. Now, unfortunately, and and this is 0:05:02.720 --> 0:05:05.880 a problem with a lot of factory jobs. In this time, 0:05:05.920 --> 0:05:08.680 Hawking was known to have rough working conditions and poor 0:05:08.720 --> 0:05:11.880 wages for its employees. They were underpaid, even high level 0:05:11.920 --> 0:05:17.560 employees at that time comparatively. And additionally, this was kind 0:05:17.600 --> 0:05:21.080 of a fun fact, I guess kind of the founders 0:05:21.080 --> 0:05:26.679 were not fans of unions employees being able to band 0:05:26.720 --> 0:05:30.200 together and demand better working conditions. And yeah, so much 0:05:30.240 --> 0:05:32.719 so that when there was a glass workers strike in 0:05:32.880 --> 0:05:37.599 nineteen eleven, Fulton hired scabbers from the Glass Bottle Blowing 0:05:37.640 --> 0:05:40.440 Association or the g b b A to take up 0:05:40.440 --> 0:05:42.520 the work. So he was just like, I'm going to 0:05:42.600 --> 0:05:48.400 hire scabbers because these unions are dumb. Now, I will 0:05:48.440 --> 0:05:50.880 say they did improve conditions in the nine thirties when 0:05:50.880 --> 0:05:53.520 we got the National Industrial Recovery Act and later the 0:05:53.560 --> 0:05:56.880 Wagner Act under f DR, and Hawking said, yeah, well 0:05:57.800 --> 0:06:00.119 follow all of these regulations. So things got better at 0:06:00.120 --> 0:06:03.760 that time. Once it became the law then suddenly they 0:06:03.760 --> 0:06:07.000 were totally on board. Uh, there was a there was 0:06:07.040 --> 0:06:12.960 a little bit of a setback in nineteen twenty four. Um. Yeah, 0:06:13.080 --> 0:06:16.960 fire burned down the factory. Not surprising when you're dealing 0:06:17.000 --> 0:06:20.360 with molten glass. Yeah, as it turns out, First of all, 0:06:20.520 --> 0:06:22.920 things were a lot more flammable back then. Yeah, and 0:06:22.960 --> 0:06:25.320 we don't talk about it a lot. A lot of 0:06:25.400 --> 0:06:29.120 factories had fires at various points yea of history of 0:06:29.240 --> 0:06:33.360 this company. Yeah, So at that point that meant that 0:06:33.520 --> 0:06:37.160 the fifty people who would normally work in that factory 0:06:37.240 --> 0:06:42.599 had no factory to work in holiday. Yeah. But but 0:06:43.360 --> 0:06:45.719 they actually were able to rebound from that. The company 0:06:45.720 --> 0:06:47.440 had made enough money so that they were able to 0:06:47.440 --> 0:06:50.600 reinvest that money and build out new factories, and they 0:06:50.640 --> 0:06:53.640 also had enough to go and acquire a couple of 0:06:53.680 --> 0:06:57.080 other glassmaking companies. But then we get the Great Depression, which, 0:06:57.120 --> 0:06:59.440 as we know, was hard for so many companies. It 0:06:59.480 --> 0:07:01.800 wasn't so great it as it turns out, it's a 0:07:01.839 --> 0:07:05.840 really terrible depression, but it wasn't that bad for Hawking Glass. 0:07:05.680 --> 0:07:10.720 That's that's true because they were able to mostly just 0:07:10.800 --> 0:07:14.480 by coincidence they had happened to not by coincidence, but 0:07:14.560 --> 0:07:19.560 but good timing. They had just developed a an approach 0:07:19.800 --> 0:07:24.880 that would end up dramatically speeding up the process of glassblowing. 0:07:24.920 --> 0:07:27.520 And by speeding it up, they also meant that it 0:07:27.600 --> 0:07:32.160 was more efficient, thus therefore less costly. So ultimately, what 0:07:32.240 --> 0:07:36.960 that translates into is that they could sell glassware for 0:07:37.040 --> 0:07:39.200 less money than they had and still make a profit, 0:07:39.360 --> 0:07:41.840 which is great because everybody had less money. Yes, so 0:07:41.880 --> 0:07:44.520 they could end up selling like two tumblers for a nickel, 0:07:44.680 --> 0:07:47.080 for example, and still make a profit off of that. Charlie, 0:07:47.120 --> 0:07:50.120 if I could have two tumblers for nickel, I would 0:07:50.200 --> 0:07:53.560 build a fort out of tumblers. I'll tumble for you 0:07:54.400 --> 0:07:59.040 different tumbler. Oh right, got it. So that managed to 0:07:59.080 --> 0:08:02.280 allow them to afloat during the Great Depression. They were 0:08:02.280 --> 0:08:06.120 actually still able to sell to the average consumers out 0:08:06.160 --> 0:08:09.400 there because they were able to price their products at 0:08:09.440 --> 0:08:16.680 a very competitive level. Yeah. Yeah, And in Hawking Glass 0:08:16.760 --> 0:08:19.960 merged with a company called Anchor Cap and Closure Corporation 0:08:20.120 --> 0:08:24.240 and they became the Anchor Hawking Glass Corporation. Yeah, so 0:08:24.520 --> 0:08:27.680 Anchor Cap Enclosure, that name probably gives you a hint. 0:08:27.760 --> 0:08:30.880 It was sort of a bottle cap. Yeah, yeah, so 0:08:31.040 --> 0:08:33.480 if you're ever a fallout fan, this is where they 0:08:33.520 --> 0:08:36.439 made the money, apparently, because it's all in bottle caps. Okay, 0:08:36.480 --> 0:08:39.320 that's enough of a tangent there. So then we get 0:08:39.440 --> 0:08:43.480 up to, uh, the fifties and sixties, and we're rushing 0:08:43.520 --> 0:08:47.320 through this because as dramatic as these stories are, where 0:08:47.320 --> 0:08:49.000 things like the Great Depression or a fire could have 0:08:49.000 --> 0:08:51.120 wiped them out, it's not the biggest brink moment. Yeah, 0:08:51.120 --> 0:08:54.360 we're not even close yet. So in the fifties and sixties, 0:08:54.640 --> 0:08:59.800 Anchor Hawking Glass Corporation would expand. Uh, they also not 0:09:00.120 --> 0:09:02.680 just grew as a company. They started to diversify in 0:09:02.720 --> 0:09:05.600 the sort of stuff that they made, and they also 0:09:05.679 --> 0:09:08.880 made more acquisitions. They opened up more factories, They actually 0:09:08.880 --> 0:09:14.280 created R and D facilities. They acquired a mold too 0:09:14.840 --> 0:09:17.920 form glass. Yeah, not white mold on a bread. No not. 0:09:18.320 --> 0:09:20.959 They weren't into penicillin, no, no, I mean, I mean 0:09:21.040 --> 0:09:23.560 maybe if they got to cut or something. Um. And 0:09:23.600 --> 0:09:26.079 then by the end of the sixties they had expanded 0:09:26.160 --> 0:09:30.120 so much that they became the Anchor Hawking Company. They 0:09:30.200 --> 0:09:32.640 removed glass from the name of their company because they 0:09:32.640 --> 0:09:36.520 felt that that was too limiting. Then made people think, oh, 0:09:37.000 --> 0:09:39.240 like the glass company, So they just took that out 0:09:39.240 --> 0:09:42.480 of their name because they were also doing other things yeah, 0:09:42.640 --> 0:09:47.520 like bottling, yeah, peanut butter jars, yeah, beer bottles, and 0:09:47.640 --> 0:09:51.400 enclosures and glass table where they were making millions of 0:09:51.440 --> 0:09:53.960 dollars in sales and profits. Now, the thing is up 0:09:54.040 --> 0:09:56.360 until this point, Anchor Hawking was kind of getting a 0:09:56.400 --> 0:10:00.439 reputation for being conservative. They had never acquired any yet 0:10:00.480 --> 0:10:03.160 by this point, which is kind of impressive considering they've 0:10:03.200 --> 0:10:06.200 had some fires and stuff. They were they were able 0:10:06.240 --> 0:10:08.520 to be profitable enough early enough that they were able 0:10:08.520 --> 0:10:11.320 to pay off those initial investments without having it just 0:10:11.480 --> 0:10:14.439 continue to loom over the head of the company. Yes, 0:10:14.520 --> 0:10:16.640 but it was decided that Anchor Hockey needed some new 0:10:16.640 --> 0:10:19.200 life breathed into it, so they got an outsider to 0:10:19.240 --> 0:10:23.160 be their CEO, John Gushman, and he was the one 0:10:23.200 --> 0:10:26.200 who took the glass out of the name. Around this time, 0:10:26.200 --> 0:10:28.160 they were at their peak. They had about five thousand 0:10:28.200 --> 0:10:32.760 employees in their headquarters alone, and they were Lancaster, Ohio's 0:10:32.880 --> 0:10:36.640 largest employer at the time. And under Gushman, there was 0:10:36.679 --> 0:10:39.800 a bunch of turnover and managers and they acquired nine 0:10:39.840 --> 0:10:44.920 companies so things seem to be going okay, yeah, I mean, 0:10:44.960 --> 0:10:50.280 what could possibly go wrong? Well, we'll tell you the 0:10:50.400 --> 0:10:56.559 first We're gonna take a quick break now, Ariel, you 0:10:56.760 --> 0:11:01.400 did the classic cliffhanger before ache back there, and I'm 0:11:01.440 --> 0:11:03.880 going to be honest with you. I haven't read this 0:11:03.960 --> 0:11:06.280 next note, so I honestly don't know where things are going. 0:11:06.520 --> 0:11:08.200 I want to hear. Okay. So, by the end of 0:11:08.200 --> 0:11:12.680 the seventies, Achor Hawking had expanded into plastics, lighting, cabinet tree, 0:11:12.720 --> 0:11:17.000 and stoneware. While so well outside of just glass yes, uh, 0:11:17.040 --> 0:11:20.440 they had also acquired thirty five million dollars in long 0:11:20.559 --> 0:11:23.280 term debt from the purchase of the Cabinet Tree Company, 0:11:23.280 --> 0:11:27.320 which also did window hardware. Gotcha, So by acquiring this company, 0:11:27.360 --> 0:11:30.120 they had to take out loans in order to make 0:11:30.120 --> 0:11:33.480 that acquisition. For now they have this debt, which I 0:11:33.480 --> 0:11:35.720 don't understand why they're saying, oh, well, the company has 0:11:35.760 --> 0:11:37.440 never been in debt. We should take some debt on 0:11:37.520 --> 0:11:40.320 to get some companies like that'll help us grow. It 0:11:40.320 --> 0:11:43.760 seems counterintuitive, but they tried it. Around the same time, 0:11:43.800 --> 0:11:47.520 though they were facing downward turn in sales rises in costs, 0:11:47.559 --> 0:11:50.000 there were some price control issues, and then they had 0:11:50.000 --> 0:11:54.319 a ten week union strike. Wow. Okay, so it's like 0:11:55.400 --> 0:11:59.439 everything that could go wrong pretty much went wrong all 0:11:59.480 --> 0:12:02.480 at once. Yes, so they knew that they had to 0:12:02.520 --> 0:12:05.240 start making some changes to bring those profits back up 0:12:05.320 --> 0:12:08.679 before they fell too far to salvage. Now, I'm guessing 0:12:08.679 --> 0:12:11.520 that part of that just meant they needed to kind 0:12:11.520 --> 0:12:15.439 of shed some of these these businesses they had been acquiring. Yes, 0:12:16.160 --> 0:12:18.880 they did. In nineteen seventy eight, they started investing themselves 0:12:18.920 --> 0:12:21.680 of some of their previous acquisitions, although they were still 0:12:21.679 --> 0:12:23.960 making some like they bought the Shenango China Company in 0:12:24.000 --> 0:12:27.560 nineteen seventy nine. But they're acquired lighting company. Since we 0:12:27.559 --> 0:12:31.720 said they were into lighting that burnt down. I mean again, 0:12:32.400 --> 0:12:35.160 you know, stuff is flammable, although in the in the 0:12:35.480 --> 0:12:38.920 in the late seventies less so than it wasn't the third. Yes, Yes, 0:12:39.160 --> 0:12:41.880 they sold their Stoneware acquisition, they sold some other stuff, 0:12:42.240 --> 0:12:47.160 and then they replaced Gushman, so the outside CEO was 0:12:47.400 --> 0:12:51.120 now truly back on the outside. Yeah. Well, he decided 0:12:51.160 --> 0:12:53.040 to take on some debt right at the decline of things, 0:12:53.040 --> 0:12:55.559 so I'm sure that didn't help his position in the company. 0:12:55.640 --> 0:12:59.000 They replaced him with a man named Jay Ray topper 0:12:59.400 --> 0:13:03.079 Jay Ray. You can call me Ja or you can 0:13:03.080 --> 0:13:07.120 call me Ray. Well, by the early nineteen eighties, they 0:13:07.160 --> 0:13:11.600 were doing all right as far as their sales were concerned, 0:13:11.640 --> 0:13:14.400 but they were still losing money overall, and they were 0:13:14.440 --> 0:13:18.840 not profitable. So at that point they looked to see 0:13:18.880 --> 0:13:21.600 what else they can shed and how they can, you know, 0:13:21.840 --> 0:13:24.840 manage this business to return to profitability. And part of 0:13:24.840 --> 0:13:30.000 that was selling a glass container division for three million 0:13:30.000 --> 0:13:33.440 dollars to Wesray Corporation. At least it was worth three 0:13:33.760 --> 0:13:37.560 million dollars, but wes Ray didn't pay three They only 0:13:37.600 --> 0:13:42.160 paid sixty eight million, and Acri Hockey didn't even get 0:13:42.200 --> 0:13:47.400 all that. Yeah yeah, so yikes uh. And part of 0:13:47.440 --> 0:13:51.199 this was because you were starting to see how plastic 0:13:51.440 --> 0:13:55.240 was becoming so cheap and so easy to produce and 0:13:55.240 --> 0:13:58.400 it could be turned out so fast that it was 0:13:58.480 --> 0:14:01.840 becoming a major old native to glass containers. So for 0:14:01.920 --> 0:14:04.320 a lot of stuff out there, there were companies who 0:14:04.320 --> 0:14:07.720 were switching from glass to plastic. Not for everything obviously, 0:14:07.760 --> 0:14:09.280 you know, if you want to go out and get pickles, 0:14:09.320 --> 0:14:11.640 they tend to be in glass jars, not plastic ones. 0:14:12.120 --> 0:14:14.480 But for stuff like peanut butter, which had been you know, 0:14:14.520 --> 0:14:17.960 an old mainstay of the Anchor Hawking Company. Well that 0:14:18.040 --> 0:14:21.000 was going into plastic now. Yeah, So this company, this 0:14:21.000 --> 0:14:24.400 this offshoot glass container company got purchased by Vitro s 0:14:24.480 --> 0:14:29.000 A went bankrupt in and was bought by with Zada 0:14:29.080 --> 0:14:32.360 Investment Partners. It still had Anchor Hawking in its name, 0:14:32.480 --> 0:14:35.080 and I think it's still around, but the notes kind 0:14:35.120 --> 0:14:37.400 of trailed off after that, right, and it and it 0:14:37.440 --> 0:14:41.240 didn't have any actual connection to the older Anchor Hawking 0:14:41.280 --> 0:14:43.920 Company at that point apart from that name. Yes, And 0:14:44.040 --> 0:14:47.320 now we get to our old we get to the 0:14:47.360 --> 0:14:49.880 beginning of the real break. Yeah, and we get to 0:14:49.960 --> 0:14:52.440 the entrance of our old old friend who we love 0:14:52.520 --> 0:14:58.280 talking about, Carl icon High. Yes, the activist investor who 0:14:58.400 --> 0:15:05.200 has you used his enormous wealth to influence companies across 0:15:05.360 --> 0:15:10.120 multiple industries frequently to the point of essentially controlling what 0:15:10.160 --> 0:15:12.520 they did from that point, and he tried to do 0:15:12.600 --> 0:15:17.880 that here. He had gotten six percent of the Anchor 0:15:17.920 --> 0:15:24.040 Hawking Company, yeah, which was cash rich at that time 0:15:24.120 --> 0:15:28.160 from the sale of their their divisions. Yeah, and they 0:15:28.200 --> 0:15:32.080 were undervalued because of the lack of sales. And he 0:15:32.640 --> 0:15:34.880 saw the chance to take advantage of them, he did 0:15:34.920 --> 0:15:39.680 what is called green mailing them. Oh, I interesting, I 0:15:39.720 --> 0:15:43.480 don't think I've ever heard the term green mailing. Well, 0:15:43.760 --> 0:15:49.480 I've read it at least once. Jonathan, Well, he uh, 0:15:49.720 --> 0:15:52.920 in return for these big investments, he was saying, you 0:15:52.960 --> 0:15:54.840 know what, I deserve a seat on your board of 0:15:54.880 --> 0:15:59.280 directors because I'm I'm a major investor in the company, 0:15:59.400 --> 0:16:04.560 and the company wanted to not do that. Yeah, and 0:16:04.600 --> 0:16:07.200 he said, cool, you gotta buy my shares back at 0:16:07.280 --> 0:16:10.280 like a premium price. Yeah. So this is one of 0:16:10.320 --> 0:16:14.720 those cases where, uh, it's almost like a hostile takeover, right, 0:16:14.760 --> 0:16:18.560 where where investors come in and they take enough shares 0:16:18.640 --> 0:16:21.200 of a company to have you know, like if it's 0:16:21.240 --> 0:16:24.960 common stock, they can have voting control of the company. 0:16:25.040 --> 0:16:27.840 And if they do that with enough shares, then they 0:16:27.840 --> 0:16:30.520 can determine what the company does, no matter what the 0:16:30.520 --> 0:16:33.440 board of directors wants it to do. Um. So in 0:16:33.440 --> 0:16:37.800 this case, you know, Icon didn't have that much uh shares, 0:16:38.120 --> 0:16:41.120 and he couldn't really influence enough other investors to do it, 0:16:41.160 --> 0:16:43.080 but he had enough for him to be a pain 0:16:43.120 --> 0:16:46.200 in the butt. Yes, So that didn't help because they 0:16:46.200 --> 0:16:49.280 did buy those shares back because they wanted to keep 0:16:49.320 --> 0:16:52.880 their independency from him. They had to lay off six 0:16:52.960 --> 0:16:55.760 hundred and fifty people after closing one of their major 0:16:55.760 --> 0:17:00.360 glassware plants in Lancaster. Yeah, so not a good sign. Yep. 0:17:00.720 --> 0:17:05.520 Then in February of seven, uh, they had to Well, 0:17:05.680 --> 0:17:11.880 there was a long battle for control of of Anchor Hawking, right, Yes, 0:17:12.200 --> 0:17:14.960 what the New York Times calls a five month long 0:17:15.080 --> 0:17:18.119 takeover battle. That's it's crazy to think that this is 0:17:18.200 --> 0:17:22.000 over a company that is primarily known for making glasswear. Yeah, 0:17:22.240 --> 0:17:26.960 so it is. It's just ridiculous. But the person who 0:17:27.040 --> 0:17:30.400 was trying to take over Anchor Hawking was the Newell Company, right, 0:17:30.600 --> 0:17:34.520 who also had similar type products housewares and such, and 0:17:34.560 --> 0:17:37.720 sold it similar locations as Anchor Hawking. And they bought 0:17:37.720 --> 0:17:40.360 the Anchor Hawking Company for three hundred and thirty eight 0:17:40.400 --> 0:17:43.399 point two million dollars in a leverage, hostile takeover. So 0:17:43.480 --> 0:17:45.440 exactly what we were talking about a second ago. They've 0:17:45.480 --> 0:17:47.919 got enough control of shares to say, all right, we 0:17:48.000 --> 0:17:51.200 agreed to this acquisition. Yes, they had started buying shares 0:17:51.200 --> 0:17:53.560 in Acre Hawking in preparation to take the company over 0:17:53.600 --> 0:17:56.199 in the summer of eighty six. So it took, like 0:17:56.240 --> 0:17:58.800 you said, about half a year of just acquiring shares 0:17:58.840 --> 0:18:00.159 to get to the point where they could do this, 0:18:00.400 --> 0:18:02.560 And once they had enough stake in the company, they 0:18:02.600 --> 0:18:05.040 offered to buy the company at thirty four dollars to share, 0:18:05.359 --> 0:18:08.640 and the board of Anchor Hawking said, no, yeah, there's 0:18:08.640 --> 0:18:10.840 too many conditions attached to this, We're not comfortable with it. 0:18:10.920 --> 0:18:16.160 So they revised their offer in January seven, and Anchor 0:18:16.200 --> 0:18:21.480 Hawking agreed. Gotcha. So at this point you had a 0:18:21.520 --> 0:18:25.439 couple of different options that were presented to the shareholders 0:18:26.080 --> 0:18:29.800 in an effort to make this attractive for them to say, yes, 0:18:30.119 --> 0:18:32.399 we were totally on board, which, by the way, the 0:18:32.440 --> 0:18:34.800 first of was the revised offer. They went over the 0:18:34.840 --> 0:18:38.240 CEO of Anchor Hawking's head board members to say, hey, 0:18:38.280 --> 0:18:40.400 we want to buy you, and the board agreed. Right. 0:18:40.800 --> 0:18:45.560 So one of the options they had was that shareholders 0:18:45.560 --> 0:18:49.080 would receive sixteen dollars a share and a sixteen dollar 0:18:49.119 --> 0:18:53.320 principal amount of subordinated debentures, which are not the same thing. 0:18:53.359 --> 0:18:56.680 Is subordinated debentures? Yeah, which I kept wanting to type 0:18:56.680 --> 0:18:58.879 when I was writing these notes. Yeah, but so what 0:18:59.000 --> 0:19:02.440 is subordinated debt. Well, when you have a company and 0:19:02.480 --> 0:19:05.320 you have subordinated debt, that's essentially debt that you pay 0:19:05.320 --> 0:19:08.920 off last. Right, like you have you have various loans 0:19:08.960 --> 0:19:11.399 and debt that you have to pay, you're obligated to 0:19:11.480 --> 0:19:15.760 pay that back. Subordinated debt is the lowest priority stuff, 0:19:16.200 --> 0:19:19.240 and so before you pay off your subordinated debt, you 0:19:19.320 --> 0:19:23.840 have to pay off everything else. So the sixteen dollars 0:19:23.880 --> 0:19:28.880 per share plus sixteen dollars for the subordinated debentures, that's 0:19:28.960 --> 0:19:32.320 essentially saying, once the company has paid off all its 0:19:32.320 --> 0:19:35.639 other debt, then the money that's left over will be 0:19:36.560 --> 0:19:38.879 at least some of it will be paid out in 0:19:38.880 --> 0:19:42.280 the sixteen dollar debentures. So that was option one. So 0:19:42.320 --> 0:19:44.920 if you if you want to cash out, you gotta wait. Yes, yeah, 0:19:45.040 --> 0:19:46.280 you have to wait, and you have to hope that 0:19:46.320 --> 0:19:48.560 there's enough money in this deal to pay off all 0:19:48.600 --> 0:19:53.000 the outstanding debt. Then option two was shareholders would receive 0:19:53.119 --> 0:19:56.679 one share of the holding company's convertible stock with an 0:19:56.720 --> 0:20:00.080 annual dividend of around two dollars a share and a 0:20:00.119 --> 0:20:03.120 liquidation price of thirty two dollars per share, and then 0:20:03.200 --> 0:20:06.920 that could be converted to common stock at a premium. 0:20:07.040 --> 0:20:11.159 So what does that mean. Well, dividends a payout. So 0:20:11.200 --> 0:20:15.000 if you have a stock that pays with dividends, then 0:20:15.000 --> 0:20:19.080 on a regular basis, you get a payout whatever that 0:20:19.119 --> 0:20:22.400 payout is rated for that particular stock. This is determined 0:20:22.400 --> 0:20:25.200 by the company's board of directors, and in the United 0:20:25.200 --> 0:20:29.040 States at least, there's no one rule about how frequently 0:20:29.080 --> 0:20:31.800 these are paid out. Some companies pay out them out quarterly, 0:20:31.960 --> 0:20:35.440 so you'll get one fourth of the amount four times 0:20:35.440 --> 0:20:38.720 a year. Some do it semi annually, some do it annually. 0:20:38.840 --> 0:20:41.359 You know, it all depends on the company. Anyway, it 0:20:41.400 --> 0:20:44.280 means that every year you would get this two dollars 0:20:44.280 --> 0:20:46.480 and a little bit more paid out as a dividend. 0:20:46.680 --> 0:20:48.320 Not very much per share, but if you have a 0:20:48.320 --> 0:20:50.639 lot of shares, it adds up and it's meant to 0:20:50.640 --> 0:20:54.560 be a way to uh encourage people to reinvest in 0:20:54.600 --> 0:20:57.960 the company, right to buy. They take their dividend and 0:20:57.960 --> 0:20:59.960 then they use that to buy more shares in the company. 0:21:00.040 --> 0:21:03.480 Me there are certain companies that became famous for their 0:21:03.520 --> 0:21:07.040 dividends and that was like the reason to own stock 0:21:07.240 --> 0:21:09.880 ge for a very long time. That was the type 0:21:09.880 --> 0:21:13.959 of company they were UM and then common stock is 0:21:14.520 --> 0:21:16.800 the type of stock where if you own common stock, 0:21:16.880 --> 0:21:20.439 you have a vote on company matters. Right, A share 0:21:20.800 --> 0:21:23.919 represents like a vote, So if there are lots and 0:21:23.960 --> 0:21:26.159 lots and lots of shares out there, it doesn't amount 0:21:26.200 --> 0:21:28.720 too much. But if you own thousands of shares, then 0:21:28.720 --> 0:21:31.280 you have a lot of voting power. Um. That's in 0:21:32.200 --> 0:21:35.480 contrast to preferred stock, where it's a share in the company, 0:21:35.560 --> 0:21:37.520 but you don't have any voting rights. But they also 0:21:37.560 --> 0:21:42.080 had a third option they did so what was option three? Well, 0:21:42.119 --> 0:21:45.959 if Anchor Hockey Company shareholders didn't like those options, they 0:21:45.960 --> 0:21:49.080 could choose to defer paying taxes as long as they 0:21:49.080 --> 0:21:51.520 held onto their shares in the new company. Yeah. So 0:21:52.040 --> 0:21:56.200 really what this was was telling shareholders, Hey, we want 0:21:56.280 --> 0:21:59.520 you guys to believe in this and too, you know, 0:21:59.560 --> 0:22:03.040 hold on of these shares. Uh. You know, obviously like 0:22:04.000 --> 0:22:07.679 and attracting shareholders is great because it means new investments 0:22:07.680 --> 0:22:10.399 coming into the company. You don't have to raise as 0:22:10.480 --> 0:22:13.520 much money then because you have influx of of cash 0:22:13.560 --> 0:22:15.920 coming in. So this was all part of the plan 0:22:16.000 --> 0:22:19.120 to try and keep the company stable during this transition. Yes, 0:22:19.320 --> 0:22:23.119 and they renamed the company Anchor Hawking specialty glass classes 0:22:23.160 --> 0:22:25.240 back in the name glasses, back in the name Well, 0:22:25.280 --> 0:22:28.840 it's apropos uh. And the head of Newell, Daniel Ferguson, 0:22:28.960 --> 0:22:32.959 became the head of Anchor Hawking, right. And then the 0:22:33.000 --> 0:22:35.320 first thing he starts to do is look at the 0:22:35.359 --> 0:22:38.960 profitability sheets, right for all the different facilities, Like he 0:22:39.320 --> 0:22:42.200 wasted no time. Yeah. Essentially it's like, hey, if you're 0:22:42.200 --> 0:22:46.280 not if you're not in the black, you're gone. Yeah, 0:22:46.320 --> 0:22:49.439 we're gonna We're gonna kick you to the curb. And 0:22:49.480 --> 0:22:54.200 then for the plants that we're doing well, he would 0:22:54.280 --> 0:22:57.840 look at reinvesting in the plants right to improve their operations, 0:22:57.880 --> 0:23:01.800 which is good. And so he started looking at the 0:23:01.880 --> 0:23:06.560 different stuff that Anchor Hawking was making and decided to 0:23:06.600 --> 0:23:10.000 sort of organize the company around the types of products 0:23:10.040 --> 0:23:13.440 the different places were specializing in. Right, so you would 0:23:13.480 --> 0:23:17.920 have a specific division for one type of product versus another. Yeah, 0:23:18.119 --> 0:23:21.920 and then he fired a whole bunch of executives and 0:23:22.000 --> 0:23:26.880