James Goldsmith - Career

Career

During the 1950s and 60s Goldsmith's involvement in finance was more as a gambler than an industrialist, and brought him several times close to bankruptcy. His successes included winning the British franchise for Alka-Seltzer and introducing low-cost generic drugs to the UK. He was a greenmail corporate raider and asset stripper. With the financial backing of Sir Isaac Wolfson, he acquired diverse food companies quoted on the London Stock Exchange as Cavenham Foods. This included Bovril – the acquisition of which he financed by selling its assets in South America and elsewhere. As journalists began to question his techniques of dealing with the funds and assets of publicly-quoted companies, Goldsmith began dealing through private companies registered in the UK and abroad. These included the French company Générale Occidentale and Hong Kong and then Cayman-registered General Oriental Investments. During the 60s and 70s Goldsmith had backing by the finance company Slater, Walker, run by Jim Slater. When Slater, Walker crashed and had to be rescued by the Bank of England in 1975, eyebrows rose when it was handed to Goldsmith for its final dismemberment through his private companies.

Goldsmith was knighted in the 1976 resignation honours – the so-called "Lavender List" – of Prime Minister Harold Wilson. In early 1980, he formed a partnership with longtime friend and merchant banker, Sir Roland Franklin. Franklin managed Goldsmith's business in the Americas. From 1983 until 1988, Goldsmith, via takeovers in America, built a private holding company, Cavenham Forest Industries, which became one of the largest private owners of timberland and one of the top-five timber-holding companies of any type in America. Goldsmith and Franklin identified a quirk in American accounting whereby companies with substantial timberland holdings would often carry them on their balance sheets at a US $1 valuation (as the result of years of depreciation). Goldsmith, a reader of financial statements, realised that in many instances the underlying value of the timberland assets alone, carried at nearly zero value, was worth the target company's market capitalisation. With this insight, Goldsmith began raids that left him with a holding company with huge tracts of timberland acquired at virtually no net cost. Additionally, in 1986 Goldsmith's companies reportedly made $90 million from an attempted hostile takeover of the Goodyear Tire and Rubber Company.

Goldsmith retired to Mexico in 1987, having anticipated the market crash that year and liquidated assets. However he continued corporate raiding, including an attempt on British-American Tobacco in 1989 (for which he joined Kerry Packer and Jacob Rothschild). He also swapped his American timber assets for a 49.9 percent stake in Newmont Mining and remained on the board of Newmont until he liquidated his stake through open-market trades in 1993. He was precluded by the original purchase of Newmont from trying to take over the company. In 1990, Goldsmith also began a lower-profile, but also profitable, global "private equity style" investment operation. By 1994 executives working in his employ in Hong Kong had built a substantial position in the intermediation of global strategic raw-material flows. Studies of public filings have found signs of the same Goldsmith-backed Hong Kong-based team taking stakes in operations as diverse as Soviet strategic ports in Vladivostok and Vostochny, and in Zee TV, India's dominant private television broadcaster later sold to Rupert Murdoch. A large Hong Kong-linked and Goldsmith-funded stake in one of the world's largest nickel operations, INCO Indonesia, was also disclosed in the 1990s, showing Goldsmith's ability to position capital before a trend became obvious to others. The Group was also a major backer of the Hong Kong based and Singapore listed major raw material player Noble Group, with low-profile long-time Goldsmith protégé Tobias Brown serving for many years as the company's non-executive Chairman. Although little is known about the somewhat enigmatic Brown, he is widely credited with orchestrating the Goldsmith investments in the Far East, which have created more than a third of the family's wealth.