PARIS -- A takeover battle for Belgium's largest company has riveted Europe's attention for the past four weeks, not just because of the players involved, though they are very powerful, but for what it could mean on a continent that often seems more committed to the principal of a common market than to the brutal reality of it.
It is not clear who will control Societe Generale de Belgique, "the queen of Belgium," a 166-year-old holding company that accounts for an estimated one-third of the Belgian economy and is eight years older than the kingdom itself. What is clear, however, is that the bid has changed the European business establishment forever, not least by giving it a taste of the sort of painful and divisive restructuring it can expect with the integration of the European economy in 1992.
Yesterday, Italian entrepreneur Carlo de Benedetti began what he called the final move in his bid to win control of the Belgium company with a tender offer for another 15 percent of its shares. This stake would be added to the 38 percent holding that de Benedetti already claims to control.
De Benedetti, who in 10 years transformed Italy's Olivetti SpA from a near-bankrupt typewriter maker into a computer and financial empire spanning several countries, wants to make Societe Generale the foundation of a pan-European conglomerate.
The shares of Societe Generale yesterday surged 580 Belgian francs on the Brussels exchange to 4,730 francs, or about $135.14 each, on the news of de Benedetti's latest move. The price remained well above the 4,000 francs-a-share de Benedetti has offered to pay, however, and dealers predicted de Benedetti would wait for the price to fall before increasing his stake, The Associated Press reported. His current offer runs through March 4.
Other shareholders, however, were trying desperately to defeat him by forging an uneasy alliance of Belgian and French companies. On Thursday, they had seemed to do just that, but on Friday their leader, the Belgian entrepreneur Andre Leysen, abruptly dropped out of the battle after some of his partners refused to go along with his plan.
It is a tale that oozes with irony and intrigue and is peopled with characters straight from an American soap opera of wealth and power. Indeed, Europeans have been following its twists and turns as if it were just that.
Viscount Etienne Davignon, a director of "la Generale," spoke for many people last week when he said: "It's like 'Dallas' without the women."
Except that this is a spectacle that touches a raw nerve of nationalism, and foreshadows major problems down the road for the European common market. Indeed, one of the affair's major embarrassments is that it has happened in the very city in which the European Community is based. To many in Europe, the cross-borders fight for Generale -- a company as unpopular as it is powerful -- nonetheless represents a real and disturbing violation of national sovreignity. As one newspaper put it, Generale is "Belgium Inc." To take it over is tantamount to taking over Belgium itself.
Until very recently, Europeans considered hostile takeovers to be as American as "Dynasty" and "Falcon Crest" -- and, as role models, just as undesirable. But the European business landscape is changing quickly for a number of reasons, including the example of the United States, where unfriendly acquisitions have become common since the famed Martin Marrietta-Bendix contest heralded the new age in 1982. The influential French newspaper Le Monde has dubbed 1988 "the year of the takeover" on the Continent.
For one thing, European business has become more entrepreneurial and aggressive, as is evidenced by the rise of men like de Benedetti and Leysen, a financier from Antwerp. "I don't believe in clubs -- I don't believe in the Establishment," de Benedetti told Business Week magazine last summer. "I only believe in individual values."
For another, the opening up of financial markets, particularly the "Big Bang," as London's deregulation in October 1986 was called, has undermined the old, gentlemanly rules of doing business.
Then there was the October stock market collapse, which slashed 40 percent of share values in Paris and Frankfurt, 30 percent in Brussels and 25 percent in London. This has made takeovers a bargain.
Finally, there is 1992, the deadline set by the European Community for the eradication of financial and commercial barriers among its 12 members and the creation of a truly common market. As nations begin altering their laws to meet that deadline, they have fostered a real change in attitudes, and an impatience among some entrepreneurs to get the restructuring under way sooner and thus position themselves better for the fight ahead. One of the main prerequisites for success in that fight is size: Bigger is better.
De Benedetti -- whose holdings include Yves St. Laurent, Charles of the Ritz, the Buitoni food conglomerate, the French auto-parts maker Valeo, and investment banking and other financial services -- again is the prime example of this new spirit.
"The traditional multinational approach" is passe', he told Business Week in the same interview. "Corporations with international ambitions must turn to a new strategy of agreements, alliances and mergers with other companies" if they hope to survive against such giants as International Business Machines Corp. and Matsushita Electrical Industrial Co.
Takeover fever runs higher in some countries than in others. In Britain, hostile bids are among the most audacious anywhere, sometimes tantamount to Jonah swallowing the whale: Witness WPP Group's pursuit of the much bigger J. Walter Thompson advertising business and Blue Circle's acquisition of Manpower Inc. last year. Even clear expressions of government displeasure no longer stop a determined bidder, as British Petroleum Co. proved last month when it gobbled Britoil PLC, a smaller North Sea gas and oil producer.
In France, such bids are just beginning to take hold, and have helped push up stock prices on the Paris Bourse by 10 percent since the end of January. In West Germany, Switzerland and the Netherlands, onIt is a tale that oozes with irony and intrigue and is peopled with characters straight from an American soap opera of wealth and power. the other hand, government opposition and corporate antitakeover tactics have made unfriendly acquisitions of firms based there extremely rare.
Yet even in these countries, companies are beginning to test the limits, including the Swiss pharmaceuticals giant Hoffman-LaRoche, which went after Sterling Drug of the United States last month before being outmaneuvered by white knight Eastman-Kodak Co.
Nowhere, however, has there been a scenario quite like that of Societe Generale de Belgique.
Generale is not just any corporation. The location of its Brussels headquarters -- flanked by the prime minister's office and the royal palace -- is a statement of the role it plays in the history and the psyche of the nation. It is a monolith with nearly $3 billion in assets, controlling almost half of Belgium's 50 largest companies; through them it has interests in 1,260 or so businesses worldwide.
For a single American company to wield as much domestic power, it would have to be an amalgam of Citicorp, AT&T, IBM Corp., Salomon Brothers, Alcoa, Aetna and TRW, to name only a few.
Generale financed the country's industrial revolution as well as its exploitation of the Congo, now Zaire. Its officials used to say that "we have brought civilization to the world."
Progressive economists are a good deal harsher, as is literature: Michael Kurtz, the villain of Joseph Conrad's "Heart of Darkness," worked for a company widely said to be modeled on it.
But it was also a flabby giant, riddled with problems, including inbred, unimaginative management and a lackadaisical approach to business in the 1980s. Profits last year were only around $147 million at current exchange rates, far below what analysts said they should have been.
De Benedetti, speaking on Belgian television, was withering: "I would define its growth as miserable, its profitability as modest," and its decision-making as "feudal."
Another analyst added, "Generale resembles one of those families that intermarries. It degenerates."
Rumors of a battle for control first surfaced last summer, when 8 percent of its 27 million shares changed hands within the space of a month. The great fear then was that the prospective raider was French.
Generale announced a rights issue meant to dilute its capital, and the furor died down, to be drowned out completely by the world stock market collapse in late fall. Then in early January the buying picked up again at a record pace.
When, on Jan. 18, de Benedetti -- whose half-Jewish family barely made it to Switzerland and safety from the Nazis during the war -- identified himself as the mystery buyer, the country was thrown into turmoil. He said then that his French holding company, Compagnies Europeenes Reunies, or Cerus, held 18.6 percent of Generale and planned to use the Belgian group as a key part of a "pan-European conglomerate."
The move was made possible because the Belgian stock exchange has the loosest takeover rules in Europe, not even requiring raiders to disclose how much of a company's shares they have bought or sold. And the benefits to de Benedetti were immediately apparent. Generale's stock was undervalued, and because it had interests in so many areas -- insurance, banking, steel, munitions, even diamonds -- it provided him with an extraordinary selection of areas on which to build. Furthermore, expanding from a base in Brussels, in the center of Europe, would be easier than operating from his current base in Milan.
"I am not a predator," de Benedetti told Belgian television viewers in an interview a couple of weeks ago. "I am an investor and a builder."
But the press and public dubbed him "J.R." and "condottiere" -- a leader of a band of mercenaries common in Italy between the 14th and 16th centuries. Generale's chairman, Rene Lamy, accused him of trying to turn Belgium into a "colony." The company went immediately on the defensive, announcing that it would seek to increase its capital by another 60 percent, or about 16 million new shares, for sale to friendly buyers, even though the move was clearly illegal, as a Belgian court ruled.
Soon Leysen, the chairman of the chemicals concern Gevaert NV -- calling himself "the de Benedetti of Flanders" -- entered the fray as a white knight for Generale, though some analysts cautioned he might turn out to be a Trojan horse.
That is because he said that, as a condition for helping Generale, he would seek a greater role for Flemish-speaking Belgians in the company. This caused a furor in the country's French-speaking press, which countered that a takeover by someone from Italy might be preferable to a takeover by Leysen, with all that this symbolized for the rapidly expanding power of the country's Flemish community.
Enter a second white knight, the French investment banking firm Compagnie Financiere de Suez, which scooped up 10 percent of Generale's stock in one hectic night. The Suez move was complicated, since its major subsidiary, Bank Indosuez, owns 1.5 percent of Cerus. Societe Generale itself holds 1.5 percent of Suez.
Most analysts are now are betting on de Benedetti. But whoever ends up in control, the huge company, and the Belgian and European economy, are in for a drastic reshaping, everyone agrees.
As Le Monde observed, de Benedetti's move "marks the end of an epoque and the arrival of a a less padded brand of capitalism." Europe, it added, would do well to heed the "Belgian lesson."