PAUL SANCYA / ASSOCIATED PRESS Enlarge
Larry Yost entered a machine-tool apprentice program after graduating from high school in 1956, laying the groundwork for a career that would catapult the rural New Philadelphia, Ohio, farmer's son to the helm of a $6.9 billion auto parts supplier pursuing a larger rival.
A decade later, Joe Magliochetti turned down Dana Corp. twice before the Toledo supplier became his employer, but only because it acquired the Chicago firm where he was working as a management trainee. That buyout would put the Chicagoan with a blue-collar background in a position to be groomed by management-focused Dana, becoming chief executive in 1999, chairman a year later - and head of the $10.3 billion company caught in Mr. Yost's headlights.
Mr. Yost, chairman and chief executive of ArvinMeritor Inc., and Mr. Magliochetti are key players in what many predict will be a drawn-out battle launched this month by the Troy, Mich., company's unsolicited $15-a-share offer to Dana shareholders. There are similarities between the two men, including working-class beginnings that is reflected in hard-working and unpretentious behavior, but the differences are acute.
Some experts likened the management style of Mr. Magliochetti, known as “Joe Mag,” to that of the approachable and deliberate former General Motors Corp. Chairman Jack Smith. Mr. Yost, they said, is more like former Chrysler Corp. Chairman Lee Iacocca, focused and driven.
“Clearly, their two personalities are very, very different,” said analyst Joseph Phillippi, president of AutoTrends Consulting in Short Hills, N.J. “The target is one personality and the aggressor truly is an aggressive guy.”
Dana, especially under Mr. Magliochetti, would be unlikely to initiate a hostile takeover, Mr. Phillippi said. “You can never imagine Dana doing anything hostile,” he said.
Mr. Magliochetti, however, has adequate counselors and defenses to help fend off an unwanted suitor, Mr. Phillippi said. And while Mr. Yost is determined, he won't jeopardize ArvinMeritor to make the deal, he said.
“I certainly don't think he will get to the point where he will overpay,” Mr. Phillippi said.
Spurned first by Mr. Magliochetti and then Dana's board for a month, ArvinMeritor announced July 8 its intention to mount a $4.4 billion hostile takeover, saying the price could go up if a deal is negotiated. The tender offer commenced July 9.
A recommendation to Dana's shareholders from the Fortune 500 firm's board could come as early as tomorrow, the day for the regular quarterly meeting, although Mr. Magliochetti and the other directors have until Wednesday to announce their response. (Mr. Magliochetti, 61, declined to comment for this story.)
Mr. Yost said last week he long has admired Mr. Magliochetti and described their relationship as that of friendly business associates. “And I hope we can continue to be so,” the 65-year-old said.
ZAPOTOSKY / BLADE Enlarge
Dana spokesman Gary Corrigan concurred with Mr. Yost's characterization, saying the relationship is cordial and professional, but not companionable. Such friendships would have to be formed before people reach the executive levels Mr. Magliochetti and Mr. Yost are at, he said.
“Because we do compete, there is certain protocol that you have to follow,” Mr. Corrigan said.
Their relationship dates back at least to spring 2001, when ArvinMeritor - product of a 2000 merger shepherded by Mr. Yost between his Meritor Automotive and Arvin Industries Inc. - approached Dana about forming a joint venture with their replacement parts businesses, according to ArvinMeritor's tender offer to Dana shareholders.
After months of extensive negotiations and due diligence showed that a joint venture couldn't be accomplished on mutually acceptable terms, the companies explored and then abandoned other ideas, including a management buyout or sale to a financial buyer, according to the offer.
Mr. Yost declined last week to elaborate on what happened with those talks, which sparked ArvinMeritor's interest in Dana. Letters between Mr. Yost and Mr. Magliochetti, including one addressed to all Dana board members, are detailed in the tender offer and show how persuasive and persistent - or how decisive and dismissive - the sides were.
The last letter from Mr. Magliochetti said the board had no interest whatsoever in the offer, which then was for $14 a share.
“The Board is equally unanimous in concluding that no other combination of our companies would be in the best interests of Dana shareholders,” Mr. Magliochetti's letter says, in part. “There is absolutely no division of opinion on this matter among our Directors. Accordingly, any meeting or discussion as to a sale transaction or any other combination would not be productive.”
Mr. Yost continues to preach the advantages of the Dana buyout, which is expected to trim $200 million in costs annually. He long has focused on the need for suppliers to consolidate and become bigger players in the face of automaker price cuts and demands for systems instead of individual parts, and he has pledged ArvinMeritor will reach $15 billion in revenues by 2005.
Dana is a great company and a perfect fit with ArvinMeritor, said Mr. Yost, who declined to discuss the particular strengths and weaknesses of either firm with The Blade last week.
“I'm very passionate about what we're trying to do here,” said Mr. Yost, an avid car collector and restorer.
Career steps have come every three or so years for Mr. Yost, who has led various deals in the last few years, including Meritor's 1997 spinoff from Rockwell Automotive. Though it was tough to go to night school and he didn't get a degree in industrial management until 1977 from the Milwaukee School of Engineering, Mr. Yost said he wouldn't trade his experiences for anything.
Growing up on a family farm, though, didn't exactly prepare him for heading up a profitable firm.
“We, to my knowledge, never made any money,” Mr. Yost fondly recalled, adding, “It was just a great way to grow up.”
Mr. Magliochetti, whose background is in engineering, grew up in the Chicago area and graduated from the University of Illinois. While at Dana, he received management education from Hillsdale College in Hillsdale, Mich., and Harvard University.
After holding a wide range of sales, engineering, manufacturing, and management positions at Dana - including a roughly five-year stint heading up European and Middle Eastern operations - he was named company president in 1996 and elected to the board.
In Mr. Magliochetti's current role, he has championed the need for technology advances and, similar to Mr. Yost, talked of the need for focusing on systems and modules. Last fall, Mr. Magliochetti broke ground for a $30 million axle and driveshaft technology center in Maumee.
His duties, though, have included having to undertake Dana's largest restructuring following 1990s acquisitions and an industry slowdown. Dana had 86,000 employees when Mr. Magliochetti took the helm, for example, but it now has about 60,000.
Watching Mr. Magliochetti and Mr. Yost at industry gatherings can be very telling, said one industry expert who asked not to be identified. Mr. Magliochetti comfortably winds his way through handshakes and casual conversations; Mr. Yost once was visibly frustrated by the lack of professionalism when a conference started 10 minutes late, the expert said.
Both men have their admirers who paint them as modest and attentive to civic responsibilities. Other descriptions differ.
Mr. Magliochetti, his fans said, is a consensus builder, genuine, dedicated, gregarious, and respected for spending his years at Dana and working some of the same jobs employees do.
“There is no dirt - he is exactly how he is. And that's one of the things I admire about a leader,” said former Dana employee Dave Dimmer, a spokesman for Toledo's Owens Corning.
Mr. Yost's followers describe him as being a workaholic at times, a devoted tinkerer, disciplined, quiet, and as living up to what he demands. When told an analyst complimentarily described him as a “factory rat,” Mr. Yost readily agreed, saying he'd rather tour any factory than golf.
“You'd never know he has the position that he does. He's a real good guy,” said retired teacher Craig Barnett of New Philadelphia, a regular fishing buddy and one of Mr. Yost's 16 high school classmates.
Mr. Yost has said he will stay on through the acquisition attempt and for a year after if it is successful to make sure the integration goes smoothly.
Dana employees and supporters, meanwhile, have begun to joke about what the company's name could be if Mr. Yost succeeds. Among the possibilities: DanaArvinMeritor In Technology, or DAMIT, and DanaArvinMeritor Co., also known as the DAM Co.