E-mail messages marked "high priority" popped up on screens in Rouse Co. headquarters in Columbia on Monday and were followed by a brief one-liner informing employees of where and when to assemble for a series of meetings.
The workers went, division by division, at their appointed times, anxious to hear about their fate after Rouse agreed to sell itself for $7.2 billion in cash to Chicago-based General Growth Properties Inc., the nation's second largest shopping mall developer.
For many, the meetings were their first encounter with Rouse's top officials since news of the sale reached workers early Friday. The few who were willing to speak did so only on condition that their names not be used. But they described an increasingly glum environment inside the 200-employee home office as it became clear that jobs would be lost and that the company built by the late James W. Rouse, who cobbled together pieces of farmland to create Columbia in the 1960s, would disappear.
At one afternoon gathering, Anthony W. Deering, Rouse's current chairman and chief executive, addressed a hushed crowd and tried to convey a business-as-usual message, employees who attended said.
"But he kept talking about how they did the best thing for stockholders," one employee said. "He didn't do it for all the workers, obviously. James Rouse was such a people person. He didn't care about the money. and these guys care about nothing but the money."
There is the $7.2 billion in cash for the company. Then there's the $5.4 billion in Rouse debt that General Growth agreed to assume. The $12.6 billion value of this deal makes it the most ever paid for a real estate investment trust.
In recent public statements, the company repeatedly emphasized that the deal was too lucrative to turn down. Under the agreement, General Growth will pay $67.50 per share for Rouse stock. Last Thursday, the day before the sale was announced, Rouse's stock had closed at $50.61 per share.
Deering, one analyst estimated, could pocket more than $100 million, with tax benefits included. Some other members of senior management can expect newfound wealth if the deal closes, as expected, later this year.
Rouse officials did not return phone calls seeking comment about possible job losses. But John Bucksbaum, chief executive of General Growth Properties, said Tuesday that it was way too early to talk about how many positions would vanish.
"Without question there are redundancies when you buy a company or combine effort," he said. "You're not going to keep redundancy in any business."
But "the first thing we must do is get to know the business," he said. "Getting to know the people, sitting down with them, learning their desires and aspirations is going to take some time."
None of this made a bit of difference to the Rouse employee seen pacing inside the Riverside Roastery coffee shop near the Rouse's headquarters early this week, chatting nervously into her cell phone. "And the school year just started," she said quietly. "This is just terrible timing."
Another employee said the shock was not so much about the acquisition itself but the way it was handled, with the companies negotiating for months without a hint to employees of the impending sale.
"Most people thought we'd be taken over, rather than sold, so that we'd see it coming," given the hubbub that precedes takeovers, the employee said. "That's what's so shocking." Especially puzzling to some workers was what they described as a major redesign underway in the company's lakefront headquarters, a striking building designed by architect Frank Gehry that Rouse purchased last year after leasing it for a long time.
"This is corporate America," said one employee as he walked across the Rouse Co. parking lot. "The guys with the power walk out with the bucks, and whatever is left over, which isn't much, goes to the little people."
That's not the corporate America Rouse envisioned when he created the hyper-planned Columbia, designed as a residential utopia of sorts, where people of all colors, incomes and religions could live side by side in village clusters around a town center, with the Mall in Columbia at its heart.
Those who knew Rouse said his egalitarian approach extended into the workplace, creating a nurturing environment at his company. Rouse died in 1996. He had left the company in 1979.
"He set up the company based on the belief that the purpose of business is to serve legitimate human needs and bring out the best in people," said Bart Harvey, chairman and chief executive of the Enterprise Foundation, launched in 1982 by James Rouse to provide housing to low-income people.
"Profit came third," said Harvey, who worked with James Rouse for 14 years.
But many who track Rouse Co. say it long ago ceased to embody the spirit of its founder as it evolved into a more bottom-line operation. If the deal goes through, many analysts expect General Growth to boost its bottom line by consolidating overlapping functions at both companies and shedding others.
David M. Fick, an analyst with Legg Mason Wood Walker, expects that the vast majority of executive positions that provide administrative support to the mall and property management businesses will be wiped out to generate synergies and cost savings.
Rouse owns or manages more than 150 properties, including 40 malls, in 22 states. General Growth, which has been developing malls for 50 years, owns and manages more than 170 shopping centers in 41 states.
"It is widely understood in the mall business that [Rouse] is not managed as efficiently as many of their peers despite several restructuring programs in recent years," Fick wrote in a recent report for investors.
Rouse also owns a number of office buildings in downtown Columbia and the broader Baltimore region, as well as warehouse and industrial space.
"That [office space work] has never been core to [Rouse's] business, and they've been saying for a long time that if they could sell it, they would," Fick said in an interview this week. "The buyer would be a natural new employer for many of those employees."
Perhaps the least vulnerable employees, for the immediate future, are those in the land development side of the business, Fick said. Rouse has a fair amount of land in Columbia, including Emerson, a residential and office community off Interstate 95 being developed in southern Howard County. In addition, Rouse is developing planned communities in Summerlin, Nev., and two near Houston.
"There is no other public mall company in that business," Fick said. "We think that business will get sold or liquidated in some way. But it will take some time because it's a very long-term business. . . . Summerlin is only halfway through, and the two Texas projects are in the very early stages."
At the home office Monday, some employees seemed in the dark about their jobs.
"You have to understand, we're still in shock," one employee said. "The mood is really glum in there. Some people are angry, but many are just in denial."