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Once invented, the Truth Machine will have uses in all areas of human
interaction including business, politics, medicine, even human relations.
There will be early resistance to invasions against a privacy we all take for
granted, but once science begins its journey, there ll be no turning back.
Overall, the Truth Machine will have a positive effect on nearly every aspect
of society; the market will be enormous and ATI will have a monopoly for at
least 25 years. Conceivably we could become the most profitable corporation in
history.
We understand Merrill faces keen competition in signing ATI, Boschnak
answered. We believe in you and will go the extra mile. If our offer isn t
good enough, we ll sharpen our pencils. Would you be willing to come back and
let us have another crack before you commit to any other firm?
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Pete looked around the conference room. None of his team objected.
Very well, Pete replied. He reset his PDC for their next destination, shook
hands with everyone, and left the room.
The next day, the Dean Witter Discover Group promised the Armstrong team they
could beat Merrill s best deal. Before the week was over, Prudential and
Shearson Olde bowed out; although they were willing to match Merrill s offer,
they felt they couldn t compete in continued negotiations. Dean Witter and
Goldman
Sachs were still in the running and these three remaining contenders wondered
who else might be competing secretly. (While in fact, there was nobody else.)
The day they were scheduled to leave, Armstrong s team reconvened at
Merrill Lynch & Schwab headquarters. They had been assured Merrill would make
them an offer they couldn t turn down.
Boschnak pulled his PDC from his shirt pocket. I ll read you the terms and
pass out hard copies. This is our absolute best offer and it has two options.
You can take a week to decide which option you d prefer, but we d like to know
before you leave here today whether or not we have a deal.
THE TRUTH MACHINE
99
Fair enough, replied Pete.
Option number one. We ll fund the first $110 million for a seven-percent
interest in the company, plus 1.5 percent for each additional $15 million as
needed, up to an additional $300 million.
Is that still after all fees? Williams asked.
That s net to you, after everything. Pure, tax-free paid-in capital to add to
your balance sheet. No new conditions or restrictions.
Pete felt his mouth go dry. He tried to appear calm and had to consciously
instruct his body, don t start rocking!
Merrill was placing a value on his company, which still had no assets or
sales, of at least $1.57 billion.
Boschnak continued. Option number two s a bit unusual. As you know, we ve
been holding discussions with Charles Scoggins and RLG. We propose a merger:
ATI acquires 100 percent of RLG for $15 million that we ll supply. Mr.
Scoggins intends to use that money to buy out the contracts of RLG s people
not hired by ATI. He wanted six percent of ATI s stock for his exclusive
services, but we convinced him to accept four. The combination of ATI and RLG
would become a formidable favorite to win the Truth Machine race. Therefore,
we d fund you at
$125 million dollars for just a five-percent interest in the merged company.
All other terms would remain the same. That means we d be valuing the company
at
$2.5 billion.
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Barely able to hide his glee, Pete asked Boschnak to allow him a few minutes
to consult privately with his team. Tilly calmed him down. Option two seemed
the better choice, but option one was still quite acceptable. Since they had
been offered a week to decide, they all agreed to take the full week.
When Boschnak returned, Pete shook his hand and told him, The deal s yours.
We ll let you know one week from today whether we ve chosen option one or two.
In the meantime, maybe you could call Mr. Scoggins and ask him to join us in
Dallas tomorrow.
Unknown to the ATI team, Scoggins would be a major shareholder regardless of
which option they chose. Scoggins had convinced Boschnak that ATI
was the firm to bet on. Armstrong s talent is way beyond Bonhert s and mine,
he had explained, and as far as I can tell, nobody other than the three of us
even has a shot at it. Boschnak, performing his own investigation, soon
learned that
Scoggins was telling the truth.
Scoggins later told him, rather disingenuously, Leo, if I d known
Armstrong was going to do this, I would have tried to join his company instead
of
JAMES L. HALPERIN
100
coming to you. But now it s too late for me; he s already put together his
core team. The only way I can get into ATI is through you. On that pretext,
he had refused to release Merrill from the provision of non-competition in the
March 15
letter of intent, unless he somehow received at least two percent of ATI s
stock, or four percent if he included his services.
Naturally Boschnak s offers to ATI took Merrill Lynch & Schwab s predicament
into account.
It is doubtful that Scoggins had ever planned to operate RLG as an independent
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