Cover Story - ‘The World Cup of Business'

Cover Story - ‘The World Cup of Business'
The scores are in and Alcan Inc.’s David L. McAusland is InHouse-ZSA''s 2007 Canadian Corporate Counsel Newsmaker of the Year. The $38.1-billion cash takeover of Alcan by Rio Tinto, amongst other things, kept McAusland busy for the better part of 2007, but he says he thrives on challenge as much as world-class athletes do. To say 2007 was a big year for Alcan Inc.’s David L. McAusland is, well, the understatement of the year.

“To be perfectly honest, it’s been a big eight or nine years for me,” McAusland says from his Montreal office. For the time being, he’s tying up loose ends at Alcan Inc. — now known as Rio Tinto Alcan — before moving on to the unknown.

“I’m trying to get out of Dodge as they say, and it’s like one of those horror movies where the hand keeps coming up from the grave and pulling me back,” he jokes.

It’s been a banner year for McAusland and Montreal-based Alcan Inc. The $38.1-billion cash takeover by London, England-based mining giant Rio Tinto thwarted a hostile bid by Alcan’s U.S. rival Alcoa and created the world’s largest aluminum producer. It also produced a plum deal for shareholders. And McAusland was in the thick of it all.

It’s easy to see why he was top choice for this year’s honours.

Last fall, InHouse partnered with ZSA Legal Recruitment and solicited nominations for the year’s top newsmaker, an honour that carries with it the dual prize of a cover story in InHouse and $2,000 to be donated to the winner’s Canadian registered charity of choice.

The panel of judges, from both ZSA and InHouse, compiled a shortlist of nominees and chose a winner. There was much debate about the shortlist but there was no doubt that McAusland was the top newsmaker of the year.
When notified, McAusland says he was “flattered” and that he appreciated the recognition from his peers.

“For me, he walks on water,” says Ogilvy Renault LLP’s Norm Steinberg, who has worked closely with McAusland over the years — Ogilvys was lead outside counsel on the Alcan deal. “I consider him a friend and a client.”

McAusland joined Alcan Inc. in May 1999, after a career of corporate law and filling the role of managing partner at Byers Casgrain in Montreal — which merged in 2000 with Fraser Milner to form Fraser Milner Casgrain LLP.

From the get-go, McAusland was busy in his new role at Alcan, as executive vice president, corporate development and CLO. In fact, just days after starting at Alcan, he was thrust into the first-ever three-jurisdiction international merger, combining the business operations of Alcan, France’s Pechiney, and Switzerland’s Alusuisse Lonza Group.

And it’s been a wild ride ever since.

“It’s been constant transition and change and it’s been a great opportunity to be at the heart of that,” he reflects. “To be the key instigator and proponent of a number of the more significant changes.”

The merging of Rio Tinto Alcan changes the former public company into a wholly owned subsidiary. For someone like McAusland, who thrives on challenge and strategic development, the change entails a new legal role unlikely to provide the stimulation required by someone with his skill set and vision.

“The scope of the job has diminished,” he says, noting that he won’t be dropping off the face of the earth. “I just want to do something else. I don’t know what I’m going to do.

 “I’ve got things to keep me busy and I’ll try to relax a bit, but there are a few people who have asked me to help them on projects here and there. I’ll try to find a way to take some time for myself, and then who knows?” he says.
“We’ll see over the next couple of months, and I’ll eventually figure out what it is I really want to do. It’s a good time for me. It’s an absolutely outstanding opportunity for me to step back and think about what I really want to do. And I intend to take full advantage of that.”

Though McAusland doesn’t say it, there’s no doubt corporations are courting him across the country, looking to bring him on board.

Steinberg says the first thing McAusland did when he joined Alcan was to examine the company’s vulnerability to being taken over; the second was to map out a strategic plan.

“He’s like a Boy Scout,” Steinberg says, “always prepared.”

The result of McAusland’s work, says Steinberg, was a well-oiled machine that could be ready on short notice — something the company needed last year more than ever.

Indeed, it was McAusland’s forward thinking that helped Alcan thwart a hostile bid from Alcoa last May — and find a white knight in Rio Tinto shortly thereafter.

It was a complicated and intense year for Alcan, but the abridged version of the story is as follows:
Alcoa announced last May that it had launched a hostile bid to buy Alcan Inc. for US$33 billion, after closed-door talks and two years of negotiations between the aluminum companies failed to lead to an agreement.

“It was like dating,” says Steinberg. “The girl keeps saying no, but the boy keeps asking for dates.”

News of a hostile bid fraught with hurdles could take any company by surprise, but Alcan was prepared, says McAusland.

“I don’t think any company has ever been more ready than we were to face [Alcoa]. We reacted, and within our board we were able to act with absolute calm.

“When it arose we were ready. We were ready and we reacted with calm diligence and that’s what it’s all about.”
Alcan quickly rejected Alcoa’s US$33-billion marriage proposal, arguing that the offer was contrary to the best interests of its shareholders.

In a statement, Alcan chairman Yves Fortier said that the offer didn’t adequately reflect the value of Alcan’s assets, strategic capabilities, and growth prospects.

“We are convinced that the proposed Alcoa-led acquisition of Alcan is not the right choice for our shareholders,” Fortier said.

Enter the white knights. The business pages of newspapers were filled with speculation as to who would assist Alcan.

Would it be Xstrata, BHP Billiton or Rio Tinto?

At the end of the day, shareholders were in favour of the Rio Tinto bid, which was nearly one-third greater than Alcoa’s offer.

Despite the higher price for shares, the new merger would also keep jobs in Quebec. In fact, Rio Tinto Alcan is now headquartered in Montreal. Joining forces with Rio Tinto — which is largely an iron ore and copper miner — was also more appealing to Alcan.

The deal was announced last July, but the merger still had to go through numerous hoops with anti-competition regulators. European, Australian, and French regulators all needed to approve the merger. The last hurdle was getting approval from Industry Canada (which it did in October).

Less than a week before the offer was set to expire, Rio Tinto Alcan had all the approvals needed for the union.
So how does one prepare for such a deal before it happens?

“At the end of the day, it’s about thinking forward,” McAusland explains. “Where things are going and where you want to direct them, as opposed to where they are.

“It’s not something you can just sit down and prepare for in one shot and say ‘I’ve got a manual ready for that.’ It’s constantly looking to the future, thinking about what can happen, always re-evaluating the permutations and combinations around the fundamental rules of the game, and how do you want to be able to influence those rules to the extent you can. It’s a file that’s always open. It has to be.”

He says that a key to the success of the deal, as with any deal, was the ability to control the process to a high degree.

“We controlled the entire process, and that contributed very significantly to the level of success we attained,” he says. “The success is, I think, very, very heavily based on process control.

“If you can’t control the process, then the chances of you doing well are diminished.”

Even when in control of the process, however, there were no doubt difficult, stressful, and intense times for all involved. How does McAusland keep sane in the eye of the storm?

“It can be stressful at times, like in any high-stakes environment. I referred to that as the ‘world cup of business’. I’ve never competed, of course, in world-class sports or anything close to that, but those games, they’re stressful for those athletes.

“But they rise to the challenge and get motivated accordingly. I don’t see it any differently, quite frankly,” he says.
“While the situation, and other similar situations, are stressful and demanding and challenging, you have to be able to find the fun element in that stress and challenge. You have to find the professional, personal enjoyment arising from the challenge. I guess that’s my main outlet.”

Although it remains to be seen where he’ll land next, McAusland says that through his work at Alcan he wanted to succeed in demonstrating that as a lawyer in a company one can stretch the definition of what it means to be general counsel.

“There are any number of other things in a company that can be rendered compatible with, and tacked on to, that role, or subsumed within it,” he says.

“And to have the maximum possible level of job definition, or, I should say, lack of job definition, because that was the greatest thing about my job.

“It was an extremely flexible job description. It was terrific.

“Stretching the definition and paving the way for my colleagues and trying to show other people going into this side of the legal profession that it is increasingly seen as one with greater and not lesser opportunities,” he says.
“I’d like to think I’ve succeeded there.”

Rather than be seen as a roadblock or one who eliminates risk, McAusland says an in-house lawyer’s role can be just the opposite.

“You can’t make money without taking risk, right? If you could then, well, we’d all be rich.

“Business is not about risk elimination, and lawyers should not be about risk elimination. It’s understanding and managing risk intelligently and finding the opportunities on the way through risk assessment.

“I think lawyers can adapt themselves to that rather well, but it takes a mindset. It definitely takes a mindset.”
He says he’s leaving on “unbelievably fantastic good terms” but says he will miss working at Alcan.

“I was very lucky here. I got into a great environment of change where I could bring my skills to bear in multiple major transactions and initiatives to change and improve the profile of the company.

“And I had a lot of different responsibilities added to my portfolio on the way through.

“But life goes on. Life goes on,” he says. “But it’s been a great ride, no doubt.

“I’ve had a lot of fun and a lot of opportunity and I’ve been able to face any number of challenges, all of which would rank as career highlights for most people, and I’ve had many of them here.

“That’s the neat thing.”  IH

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