A Moneyman on a Takeover Mission
Right about now, the behind-the-scenes moneyman orchestrating Marvin Davis’ audacious $13-billion bid to control Vivendi Universal’s entertainment assets is somewhere on the Atlantic Ocean, hopefully closer to South America than to Africa.
Will Mesdag is pausing from the biggest takeover proposal in the media industry this year to pilot his 60-foot yacht, the Constanter, toward St. Lucia from the Canary Islands in the annual Atlantic Rally for Cruisers race. “There’s nothing better,” said Mesdag, “than ‘driving,’ especially downwind.”
That’s what deal makers also like to see in a good investment. But a cool reception by Vivendi Universal and Wall Street skepticism are making for strong headwinds.
As the man who drives Davis’ financial empire, Mesdag’s mission includes addressing straight on whether Davis’ latest bid is anything more than another example of “kicking the tires.” A slew of Davis near-misses -- which includes four airlines, CBS and the Dallas Cowboys football team -- continues to plague the billionaire, spawning a reputation in certain quarters for looking deals over but passing on them when they get too expensive.
It’s a reputation Mesdag believes is unfair.
“I’m not inclined to waste my time,” Mesdag said. “If Marvin wasn’t serious, I wouldn’t be involved with Marvin. I have any number of things I could be doing.”
Nonetheless, many on Wall Street believe debt-laden Vivendi Universal -- whose portfolio of Universal Pictures, Universal Studios theme parks and Universal Music entices Davis -- soon will join that list of could-have-beens.
When word of Davis’ bid first surfaced 10 days ago, “we didn’t take it very seriously,” said Michael Nathanson, a Sanford C. Bernstein analyst.
Davis and his camp point to a list of consummated deals that includes 20th Century Fox and the Pebble Beach golf resort (both since sold); numerous oil and gas ventures; and development of major real estate projects from Denver to Chicago to the Water Garden in Santa Monica.
Mesdag also notes that anyone with the kind of dollars Davis has (4.6 billion of them, Forbes estimates) gets pitched more deals than he can handle.
“A lot of people would like to have Marvin as an investor,” Mesdag said. “We try to do justice to all of the proposals that come in, without rejecting any of them outright.”
Missing Pieces
Mesdag compares Davis’ financial empire to a hedge fund with investments of varying risk. There are the inherently big-gamble oil and gas operations that formed the cornerstone of Davis’ early success, balanced by real estate and a large chunk of conservative Treasury bills.
Two areas Davis knows well and wants to get into, Mesdag said, are airlines and entertainment.
Hence the Vivendi Universal offer. The deal was hatched by Brian Mulligan, who served as chief financial officer of Seagram Co. when it still owned Universal studios, the theme parks and the world’s largest recording group. Mulligan then persuaded Davis and Mesdag.
Mesdag maintains that Davis and his partners have the firepower to make it happen.
“The only issue outstanding is whether Vivendi is prepared to consider the sale of these assets, and would ultimately agree to sell them to us,” Mesdag said.
So far, potential partners in the Vivendi Universal deal include Bain Capital and Texas Pacific Group, with other investment groups possibly interested. Mesdag won’t talk specifically about partners, but acknowledges that Davis can’t do the deal without them.
He promises they will be drawn to Davis’ willingness to pony up serious money as the deal’s leader.
“Suffice to say, we’ve been involved with various people who have the capacity to make their own judgment,” Mesdag said. “They take Marvin seriously and have been working with us to put this proposal together.”
Anyone with the proximity that Mesdag has to Davis automatically qualifies as a power player in Los Angeles.
Former Los Angeles Mayor Richard Riordan says Mesdag was an important part of an intimate “kitchen cabinet” that met Sundays at Riordan’s home to advise him on what turned out to be an unsuccessful gubernatorial bid.
During the primary, Riordan recalls, Mesdag advised him to play more to the Republican base rather than focus on incumbent Gov. Gray Davis.
“I wish I had followed his advice more,” said Riordan, who was defeated by businessman Bill Simon. “I might be governor today.”
Still, Mesdag is virtually unknown outside high-level business circles.
He has no formal title other than senior advisor to Marvin Davis and describes his role as something of a personal investment banker to the billionaire. Davis, however, says that description doesn’t do his lieutenant justice, adding that Mesdag is forcefully going after deals on his behalf.
“He’ll walk through a wall to get what he wants,” Davis said.
Well-Suited
The role suits Mesdag, 49, who spent 20 years at the Wall Street firm Goldman, Sachs & Co., most recently as head of the Los Angeles office.
A self-described “meat and potatoes” investment banker, Mesdag handled less glamorous deals such as the sale of Arco to British Petroleum, as well as work for Southern California Edison.
Davis is known as a demanding boss who at 77 still immerses himself in his business and investments. Acquaintances say, however, that Mesdag’s even-tempered style meshes well.
“Marvin’s not the easiest guy for some people to work for,” said fellow billionaire Eli Broad. “But Will’s got the brights and the temperament.”
Broad has seen that first hand as Mesdag’s neighbor. Mesdag heads an informal homeowners association in the private Brentwood enclave where they both live. In that post, he’s had to garner support on such issues as replacing palm trees and shrubbery, forming a consensus among neighbors who often have wildly different opinions.
“It’s a lot of petty issues, but he’s got the patience of a saint. He gets along very well with people,” Broad said.
Added another neighbor, Oaktree Capital Management Chairman Howard Marks: “He’s very high on the intelligence, integrity and likability.”
Long before he became Davis’ personal financier, Mesdag got a taste for exactly how personally involved Davis can get in a deal. Mesdag was still at Goldman Sachs when he decided to move the company’s offices from downtown Los Angeles to Fox Plaza in Century City, which at the time was owned by Davis.
Rather than delegating the lease negotiations to underlings, as most billionaires would have done, Davis sat across the table from Mesdag.
“When Marvin owns a building, Marvin cares about who his tenants are,” Mesdag said.
After retiring from Goldman Sachs last year, Mesdag set out on several adventures. He climbed Argentina’s Aconcagua, the Western Hemisphere’s tallest peak at 22,841 feet. He began racing the Constanter. Named after his grandfather’s boat, it is Dutch for “steady.”
Then Davis came calling, offering Mesdag what he naively thought would be a part-time gig.
“I assumed it would give me a lot of time to pursue my recreational interests and my extracurricular activities,” Mesdag said. “But Marvin certainly has a very full plate.”
For his part, Davis said Mesdag’s aggressiveness “has added a new vitality to this company. Not that the people here were bad, but he added new vitality.”
‘T’ for Taco
Born T. Willem Mesdag, he was raised in South Dakota and Illinois. The “T” stands for Taco, his Dutch great-grandfather’s name, which Mesdag went by as a youth but gave up as an adult because of the inevitable ribbing.
“Unfortunately, I didn’t come to that conclusion until I finished law school,” said Mesdag, a Cornell Law grad. But, he added, “If I’d had a son there would be another Taco in my family.” (He and his wife, former Fortune magazine journalist Lisa Miller Mesdag, have two daughters.)
Mesdag isn’t making any predictions about his future, saying he is focused on carrying out Davis’ business deals and making time for his hobbies, such as his sailing adventure.
But Broad said he sees Mesdag as a potential successor to Davis someday, someone who could run the family fortune for Davis’ heirs.
“I know [Davis] is very high on him,” Broad said. “Of all the people Marvin has around him, Mesdag is the likely person if Marvin wasn’t around to run his businesses.”
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Times staff writer Richard Verrier contributed to this report.
