Gibbs

"*We agreed on $108 million, a bloody good price, and they said, ‘Well, we have to refer to our HQs and consult before we give you the final answer,* *but basically we’ve got a deal.’ Then they came back with the classic tack and said, ‘Oh dear, the due diligence was not as thorough as it should have been and our boards have told us we can’t go that far.’ So they offered us 20 per cent less. I knew that they really wanted it, but they were just trying it on. I said to Craig, ‘No way!’ Then I dictated a letter from our lawyer responding to the offer, which had only one line: ‘Your offer is of no interest whatsoever to our clients.’ We were losing money and they were still offering us $80 odd million. Craig was a bit nervous, but, sure enough, the phone line began to buzz a few hours later and we got the full amount.* Heatley concedes that Gibbs was a much better bluffer. ‘We were in a weak position,’ he says, ‘and Alan convinced them we were as strong as an ox; he knew they were just being bullies, trying to chisel us, and that they’d give way if we held firm.’"

"Paul Smart, Sky’s first chief financial officer, recalls Heatley ringing one day from Gibbs’s office where Heatley was trying to encourage Gibbs and Farmer to invest. ‘Hey, Smarty,’ Heatley said, ‘tell me, when does this thing break even?’ Smart was the keeper of Sky’s business plan, which was constantly being revised as the company failed to meet its own financial targets. ‘The business plan says in two years,’ Smart told him. Sky was going to work, Heatley told Gibbs and Farmer, it was going to be great, but it was taking more ingenuity, time, effort and, most of all, money to get established than he had originally thought. But if they invested and hung on, it would get there, he promised. ‘It will only take a little money and we’ll have a lot of fun,’ Heatley told Gibbs. In fact, it would take a lot more money, another eight to ten years longer than the business plan Smart had quoted, and the company would teeter far closer to the edge of the precipice than any of them anticipated before Sky began turning a profit. ‘We made good money out of it in the end, but it was probably the hairiest ride I’ve ever had,’ Gibbs reflects."

"In 1990, the government had sold Telecom to two US telecom giants, Ameritech of Chicago and Bell Atlantic of Philadelphia, and to the New Zealand firms Freightways (owned by Gibbs and Farmer) and Fay, Richwhite (the investment bank owned by businessmen Michael Fay and David Richwhite) for $4.25 billion. Freightways and Fay, Richwhite had brokered the deal and Gibbs, who was on Telecom’s board, chaired the board committee that ran the company. Through this, Gibbs had come to know the Americans well and was used to dealing with them. He offered to talk to them about whether they might be interested in Sky. It turned out that they might."

"But for a time, all the ingenuity made no difference to the company’s struggle. A year after its launch, Sky had just 18,000 subscribers when the company had expected more like 100,000. For a period in early 1991, Sky was losing $1 million a week. Smart recalls some months where he would sit down with others to decide whether they should use the available cash to pay wages or the previous month’s PAYE, because there was insufficient money to do both. Board meetings were spent discussing loans and how much the shareholders—Heatley, Jarvis, TVNZ, Tappenden and Todd—would put in on a pro-rata basis and whether more could be raised from the banks. Gibbs and Farmer were particularly irritated. More money was required every week."

"Smart’s quick synopsis is that the company started with Jarvis and Heatley as shareholders, spent all their money, brought in TVNZ and spent its money, brought in Gibbs and Farmer and spent their money, then did the same with Todd Corp. The cash burn rate was high. Smart’s forecasts were tracking how quickly Sky would run out of money—one month, two months, three months. Heatley did not always want to know. ‘I remember once saying to him, “Jesus, Craig, you make me feel like I’m responsible for Sky running out of money,” and he looked at me and said, “Good,” and walked out of my office.’ There was occasional professional tension around how to keep Sky going with limited funds without breaking any laws or breaching any accounting standards. ‘We never went over the line but we did occasionally skate along it,’ Smart says. ‘I’d characterise it by saying that in a start-up where you are constantly running out of money, you are challenged to use every means at your disposal to fund the company.’ He sees Heatley as driven and complex, hard to like but someone who commands respect. ‘He started a business from nothing, gave us all jobs, created all that and it wasn’t easy. He might be New Zealand royalty now, but he wasn’t always.’"

"Gibbs and Heatley brought together representatives of the two biggest American media companies of the time, Time Warner of New York and Tele-Communications (TCI) of Denver, with two of the US’s biggest telecoms companies, Bell Atlantic and Ameritech, and began negotiating with them to buy into Sky. Initially, Gibbs and Heatley suggested they acquire 40 per cent of Sky, but the Americans were adamant it would be 51 per cent or nothing."

"On Sky’s side, Heatley led the negotiations with lawyer Roger Craddock, and on the HKP side there seemed to be a small army. When things were tough, Heatley and Craddock would call in Gibbs to play the bad cop to Heatley’s good cop. ‘The two telecom companies plus the two TV companies would come to Hawaii with 12 people each, which is ridiculous,’ Gibbs recalls. ‘They would come with 50 people.’"

"Gradually a figure of NZ$108 million, with a raft of conditions, was reached. They shook hands on it. It was a phenomenal deal for Sky. To have even had the four companies sit around the same table, let alone agree on a figure that was well above the New Zealanders’ expectations, was far more than Heatley had dared hope for. Gibbs’s bullishness, Heatley’s salesmanship and Craddock’s legal skills had combined to pull off a coup. Now, everyone’s shares would become more valuable and, while most of the HKP price would be distributed among the existing shareholders, there would be $25 million in new capital for Sky, which would help strengthen the company’s balance sheet. Anxious to get the deal done and desperate to stop Sky’s bleeding, Heatley would have conceded a lower sale price but Gibbs had been resolute. ‘They’ll pay it,’ he promised."

"‘No, Alan! Shit!’ Heatley pleaded. ‘I’ve spent months on this. Our future depends on it. You’re playing Russian roulette! Eighty million dollars is still a lot of money. We can’t afford to lose this. We can do them a more favourable deal.’ Heatley was wretched. It was not simply the $108 million. What if this was the end of the deal altogether? It was a complicated partnership and there was nothing to stop the Americans walking away. The letter Gibbs had dictated had not even made a counter-offer. Heatley would have been prepared to take $80 million to get the deal done. Naturally, $108 million would be better than $80 million, but $80 million was better than no deal at all. No deal now was unthinkable. Gibbs was cool. He knew how much this meant to Heatley, but Gibbs also knew the Americans. ‘No,’ he told Heatley, ‘I know these pricks. I bet they’ll be back by breakfast. This is the way they negotiate. It’s all they know.’ The letter was sent by fax. Heatley waited, more anxious than he had ever been. If it was all over, where would they look for new investors? He did not have long to wait. The Americans replied. Gibbs had been right. The deal was on again, for $108 million. Heatley’s relief was palpable."

"‘It’s standard negotiating practice,’ says Gibbs calmly, thinking back on the episode. ‘You come to a deal, do due diligence and then say to the customer, “Oh, hell, I didn’t know that the debtors were running three days late and that the ink was low in the inkwells and there were a couple of other things that were a bit nasty actually, mate, so I don’t think I’m prepared to offer that much now, let’s call it $80 million,” type of thing. I’ve been through that enough times to know that it’s just a game. But Craig wasn’t in a position to put more money in. He may even have borrowed against what he had. I haven’t a clue, but I did know that he wasn’t in any position to go very far without getting this deal. We had play money in there, but he had all his capital.’"

"‘It’s standard negotiating practice,’ says Gibbs calmly, thinking back on the episode. ‘You come to a deal, do due diligence and then say to the customer, “Oh, hell, I didn’t know that the debtors were running three days late and that the ink was low in the inkwells and there were a couple of other things that were a bit nasty actually, mate, so I don’t think I’m prepared to offer that much now, let’s call it $80 million,” type of thing. I’ve been through that enough times to know that it’s just a game. But Craig wasn’t in a position to put more money in. He may even have borrowed against what he had. I haven’t a clue, but I did know that he wasn’t in any position to go very far without getting this deal. We had play money in there, but he had all his capital.’"

"‘If there is one part of my corporate history that I could change, it would be that decision I made not to tell Trevor and Alan that I was selling my Sky shares,’ he says. ‘It was spur of the moment, based on my friendship with Rupert Murdoch and I did not think it through enough. I wasn’t trying to be clever, I wasn’t trying to do a deal behind the bike sheds and I wasn’t trying to do something that was not in their interests. My total concern was security of information, but that implies that I did not trust them and that is not true. I totally trusted them. So I don’t quite know, looking back, why I did it. It is a big personal regret and it caused some strain in our relationship for a while, but I consider both of those guys to be my close friends. Sometimes things like that happen in life—you get caught up in the moment, you don’t think something through and later you think, I should not have done that.’ Gibbs and Farmer later sold their Sky shares to Telecom."

"Stevenson rang Heatley and told him what had transpired. He has always remembered Heatley’s response. ‘Don’t ring Bruce,’ Heatley said. ‘Nothing but good will come of this.’ It seems Heatley was recalling Gibbs’s words about dealing with the Americans back in 1991: ‘This is the way they negotiate. It’s all they know.’ If Heatley was concerned he did not express it to Stevenson. Stevenson was tempted to ring McWilliam to find out whether his peremptory finish to the call had been bluster or a genuine end to negotiations but he resisted, partly so he could say, if asked, that he had not spoken to McWilliam since the call. As it turned out, Stevenson soon had an unexpected visit from a lawyer from Russell McVeagh, representing the Americans. ‘He claimed to be there by chance and had dropped in to see me and to see if I might give Bruce a call later in the day. As it happened, we were just sending out wine to clients for Christmas. I said, “Look, I’ve told you guys, I’m not ringing him. I haven’t spoken to him since the conference call. If he wanted to talk to me, he would have rung, so here’s a bottle of wine and Merry Christmas.”’"

"Even at the darkest moments I never had negativity from Gibbs. He’d ask if we were doing it the most efficient way and whether we could do it quicker, for less cost, but he never threw his hands up. In terms of tenacity and determination, I’ve never met anyone like him."

"Gibbs’ warm and easy relationship with Holyoake, who went on to become prime minister briefly in 1957 and again for more than a decade from 1960, boosted his boyhood confidence. Ian’s ambition and his success at Kinloch, meanwhile, provided Alan with a benchmark that in time he might measure himself against. His eldest brother also drove around in great sports cars. As a schoolboy, however, Alan could only daydream of future deeds and entrepreneurial schemes as he stomped the streets on his paper rounds or delivered parcels of groceries during holiday jobs at Hazelwoods. He took any opportunities that presented themselves to trade, however, such as with bubble gum at school or when mushrooms could be gathered on the hills and sold on the roadside."

"At the time of writing, Gibbs is going to market with the world’s first high-speed amphibious vehicles. He’s starting with three versions: the Phibian, a large amphi-truck designed, amongst other uses, for all-terrain search and rescue activities; the Gibbs Humdinga, a four-wheel-drive beast that can also skim across rivers and harbours; and the Gibbs Quadski, a cross between a high-speed quad bike and a jet ski, targeted at the recreational market, particularly in the United States. These are the first offerings from a series of amphibians that he plans to roll out over the next few years."

"Gibbs has had a long and highly productive business career. By adopting a low-risk style of deal making, keeping his affairs simple and choosing good partners, he amassed one of New Zealand’s largest personal fortunes during the 1980s and 1990s. His early career was an exemplar of capitalism’s creative destruction as he carried out the necessary restructuring of many inefficient companies and organisations so that either they could survive and add value in a world of open competition, or the resources invested in them could be put to better use elsewhere."

"He carries himself in a way that’s hard to define, but which makes it clear that he is a leader of men. You never find him with nothing on his mind. He’ll want to tell you how the world could be so much better if only people could be persuaded to demand their freedoms, face reality and shrug off the dead weight of government intervention. An evening with Gibbs involves plenty of inspiration, some fear (if the laser beam momentarily alights on you), a good supply of his favourite Kistler chardonnay and much laughter."

"It was a blow, but Gibbs didn’t despair yet. They’d also written to Holyoake, who’d been overseas early in September. He’d discussed the project with Marshall and asked his deputy to be ‘kept in touch with developments’.[9](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477268-974936905-9) Eventually Marshall relented and the brothers secured a meeting with him, but their charm and enthusiasm weren’t sufficient. Writing a month later, Marshall offered only a flicker of hope that he and Customs Minister Norm Shelton might consider some licences for the Anziel project further down the line if the balance of payments situation improved, allowing for a general relaxation of import controls. But there was no assurance.[10](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477268-974936905-10)"

"A little unsettled, Gibbs spent some of the following summer in Adelaide on an internship at the ICI plant converting salt into soda ash. He was assigned to work on a methods study, which considered the operation’s industrial processes to see how they might be improved. Working alongside a very bright arts graduate, he was surprised and interested to discover that although he wasn’t an engineer, this man was very good at assessing industrial processes. He learnt that ICI consciously employed non-engineers for this work, the rationale being that because they didn’t know anything about the processes, they asked the most basic, and often the most productive, questions. Engineers, by contrast, frequently took some aspects for granted and missed opportunities to do things differently."

"As an engineer, Gibbs put in a strong early performance. Maths wasn’t his favourite subject and he did no more than pass, but he gained high marks in his other first year engineering papers. The course required students to take holiday internships for practical experience, so Gibbs spent the summer of 1958/59 at Precision Engineering, a metal pressing firm near Wellington’s Basin Reserve. The experience taught him the danger in forcing intellectually stimulated people to perform boring tasks. Gibbs was drafted to spend several days feeding metal into a press while pushing a pedal each time it went in."

"Looking back on the period now, Gibbs finds it bizarre: ‘You couldn’t subscribe to an overseas magazine without government permission, couldn’t import anything without a licence, couldn’t even compete domestically with another trucking firm, for example, without going to court to get a licence and proving that you had a customer who couldn’t be served by someone else. It was an incredibly controlled country.’ The Gibbs family, like any business family in the country, had been sucked into the system. Hazelwoods, the general store in Upper Hutt, had the state-sanctioned monopoly on bread in the area. The region was neatly carved up by bureaucrats, but the price was controlled to four pence a loaf."

"Strange things came across his desk at the High Commission. In November 1963 Congo rebels attacked several church mission stations. Gibbs had to pass on a cable sent by one New Zealand missionary to her parents. It stated simply: ‘All well, Cyril with Jesus.’ In reality, Cyril had been mown down by machine-gun fire at Stanleyville; his wife, who sent the cable, had an arm hacked off and both their daughters had legs amputated.[2](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477210-626309542-2) The travails and stoicism of several missionary families that he encountered during his work profoundly affected Gibbs."

"Within a few months Alan found a small metal-pressing business in South Auckland, Holmes Manufacturing Ltd. It was a family affair owned by a tool maker who was keen to devote more time to his magnificent train set. The company employed around 12 people: two tool makers, the most highly skilled men of the trade, who made the dies from which the metal would be stamped, and 10 press operators. They made components for Dominion Electric, a company that assembled electronic goods under protection from international competition by import licences. Holmes Manufacturing produced metal chassis for radios and television sets. They also made stainless steel conveyor chains for freezing works and film reels and cans for the government film department. One of their highest volume products was a peach pitting spoon; basically a bent knife. ‘It was an elementary little business,’ Gibbs recalls, but he was intent on turning it into something bigger."

"Knowing that the car project would take months, possibly years, to come to fruition, Gibbs kept busy on other things to pay the bills. By the time Alan joined Anziel, Ian was employing six or seven people. Leaving the car project to one side, Alan’s job at Anziel was to look for a manufacturing business to buy, in order to grow the business. There was an expectation down the line that he would buy into this new business."

"the subtlety of the Japanese attitude; that it wasn’t about breaking contracts whenever they became inconvenient. It reflected a different mind-set. ‘We’re used to an absolutist Roman law view of contracts,’ Gibbs says, ‘and in the West we’ve developed languages capable of the precision needed for such contracts, whereas Japan’s language, by design, is imprecise; each word has several meanings, so as to avoid offence.’ The Japanese were relying on relationships, with a certain amount of give and take expected at difficult times."

"Ron Scott had been one of Gibbs’ mates at Canterbury University. The son of a Scottish tea planter in India, Scott had inherited some money and was working for a leading real estate firm in Sydney. The pair ran into each other and soon devised a scheme to make money in their spare time. Supermarkets were a relatively new idea in Australia and there was money to be made by consolidating a two-and-a-half-acre site suitable for a new supermarket. City councils around Sydney were keen to facilitate these developments and had rezoned a number of potential sites. The typical site had 12 private houses on it, the value of which might double overnight. The task was to buy the 12 properties, then flick the combination on to a corporate developer, such as Lend Lease. Naturally, plenty of other speculators were trying to do the same thing and it was a race to line up all the property owners at one site. The exercise was akin to herding cats."

"Occasional projects would interrupt this intellectual reverie. Soon after Gibbs left Chase-NBA, he received a call from its Australian office. One of Chase-NBA’s clients, the Millaquin Sugar Company of Brisbane, was under takeover threat from their rival, the Bundaberg Sugar Company. Chase-NBA didn’t have the corporate finance capacity to defend Millaquin and wondered whether Gibbs could do it. Millaquin had lost a lot of money throughout 1974 on a failed venture to produce cattle feed from a sugar product and towards the end of the year had slashed its profit forecasts, which had seen the share price tumble.[3](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477270-388400547-3) At the end of February 1975 Bundaberg launched a takeover bid, offering Millaquin shareholders $2.30 per share cash plus one Bundaberg share for three Millaquin. Gibbs quickly assessed the situation. Bundaberg’s offer was very generous, more than a 40 per cent premium on the market price when normal takeovers gave a 20 to 30 per cent premium. Notwithstanding the egos of the men on the Millaquin board, who stoutly resisted the idea of losing out to their local rivals, Gibbs knew that the takeover would be very hard to stop. His best bet would be to negotiate a higher price."

"As well as sub-underwriting, IPC organised takeovers. Gibbs was taught to scour though stocks to find companies that were cheap and likely to benefit from restructuring. Then they would find someone who would benefit from buying it, while arranging a hefty fee for IPC."

"His first step was to negotiate Chase-NBA’s fee with Millaquin, in this case 10 per cent of any increase in the price Millaquin obtained from Bundaberg. Gibbs had already agreed with Chase-NBA that he’d pocket 15 per cent of their fee. In a few days, after walking away from the table several times, he managed to secure a very generous redundancy deal for Millaquin’s CEO and an 11 per cent increase in the cash component of Bundaberg’s offer.[4](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477270-388400547-4) It was an outrageous price for Millaquin that generated a very generous fee for Chase; Gibbs walked away with something approaching a year’s salary for an extended weekend’s work. It was the first major takeover defence Gibbs was responsible for, and he was happy with the result:"

"Gibbs had learnt, by accident, that walking away was sometimes the best approach. Castle Hill was his biggest deal, but there were several others: a service station site, another supermarket with a wider group, and a large hardware store not far from Mosman."

"In merchant banking, Gibbs timed his run well. These banks were largely unheard of in New Zealand, with only the New Zealand United Corporation, formed in 1960, offering the sorts of services associated with London’s merchant banks."

"Gibbs advised the board to announce to shareholders that they did not recommend the Brierleys bid and that the company would make a major announcement very soon concerning the value of the business. That stopped the bid in its tracks. Within a few days, after regearing the balance sheet, Gibbs had LWR announce a substantial return of capital to shareholders and a massive increase in dividends. The share price immediately jumped well above the Brierleys bid. It was fast and easy money for Gibbs, exactly how he preferred it — nothing that couldn’t be worked out on one side of an A4 sheet of paper. Though they weren’t thinking about it in those terms, Gibbs and his contemporaries were jolting tired and inefficient companies into the modern world."

"The failed MSI takeover, meanwhile, was useful to Gibbs primarily in that it reconfirmed what he had already learnt about the art of successful takeover defences. He’d seen more of the psychology that came into play. He told a television documentary on takeovers that ran in the middle of the MSI attempt, ‘In takeover strategy personality is about 75 per cent of the consideration.’ Men put a lot of energy into building up a business and naturally had a lot of pride at stake. When they were under threat they frequently resisted beyond rational grounds.[8](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477272-550134397-8) He’d be more aware next time. MSI’s response, with its clear and simple booklet, had also been very effective."

"In December 1984, he and Jenny took the family to Mexico, where they had many adventures in an old van driven by a hairy old local the girls dubbed ‘Catweasel’. He also rediscovered the joys of skiing. Warren and Sally Paine were frequent partners in mountain excursions. A typical adventure, in Paine’s memory, started with an exclamation from a wrung-out Gibbs: ‘For heaven’s sake, Jenny, let’s have some fun.’ She’d arrange a ski trip to Aspen in Colorado or Courchevel in France with the Paines and the Reynolds. Gibbs found his release through competition. ‘There was only one speed with Alan,’ says Paine, ‘flat out. Being in front of him was like being in front of a freight train, he was always trying to pass, arms and legs were flying and he was yelling and cursing; it was great fun.’ As it was with business, so it was with entertainment: Gibbs threw himself into whatever he was doing as if the fate of the world hinged on the result and by the end of the day he was spent."

"Gibbs was ‘always searching, searching, searching; he was that sort of person, wherever he’d got to up to that point didn’t rest his soul’."

"In the summer of 1979/80, however, soon after their initial success with Tappenden, Charles Bidwill persuaded Gibbs to join him in buying some Atlas shares. Gibbs blames Bidwill’s charm for getting him entangled with the business. The strategy, from Bidwill’s point of view, was not that they were going to make money from fridges, stoves and chickens, but that since it was so unloved Atlas might be a relatively cheap and easy way to acquire a public company, which they could use as a vehicle to acquire other companies. Young and confident, Bidwill was fairly dismissive of the business leadership of the ‘RSA generation’ that still held on to power round New Zealand boardroom tables at the end of the 1970s:"

"One such project appeared in the latter part of 1981 when Douglas Myers asked Gibbs for some help in a dispute he was having with Lion Breweries. Notwithstanding their shared interest in Radio Hauraki, their separation by only a few floors in the West Plaza tower and several mutual friends, Gibbs hadn’t had much to do with Myers until then.[23](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477280-404182126-23) Through his private company, Campbell & Ehrenfried, Myers owned half of New Zealand Wines and Spirits. Lion Breweries, one of New Zealand’s largest public companies, owned the other half. Myers had fallen out with Sir Ralph Thompson, Lion’s chairman, and had exercised a contractual right to demand that Lion buy him out of New Zealand Wines and Spirits."

"The Tappenden deal ultimately proved a great financial success. Gibbs had said in the 1978 television documentary on takeovers that the ambition to obtain valuable assets cheaply was, very sensibly, the object of takeovers. He’d given a good demonstration. By late 1981 Gibbs had made a capital gain of around $2.5 million (around $9 million in today’s terms), his first ‘decent swag of dough’. Just past 40, he was a millionaire."

"Gibbs’ business associates — Bidwill, Paine, Myers and Friedlander, in particular — were all prospering. Perhaps the highest flyer of this period was Colin Reynolds, the founder of the property development company Chase Corporation. Now that these men and their wives were regulars at the Gibbs house in Parnell, it was less appropriate to get around in bare feet when entertaining. Amanda Gibbs, then a university student with socialist tendencies, was shocked when she saw her parents’ new bourgeois lifestyle."

"There was an educational benefit to Gibbs, however. Atlas’ relationship with Japanese suppliers taught him a lot about a very different business culture. Having been horrified a decade earlier by Japanese companies going against their contracts with the Australians for iron ore, he rapidly came to appreciate the flexibility when Atlas needed relief from its obligations. Atlas simply wouldn’t have survived unless the Japanese had agreed to orders being cancelled, prices on goods already arrived being adjusted, and credit arrangements being extended. ‘If you’re in the poo,’ Gibbs says, ‘Japanese firms will try to help their partners out.’ They took a much longer view than most Western companies, and made sure their brand was protected by not allowing their distributor to go broke."

"One of the joys of Gibbs’ style of operation — carrying out a relatively small number of large deals, then stepping back from ongoing management, interspersing business with frequent travel, and always allowing plenty of time for thinking and reading — was that he was free to pick up projects that interested him."

"In this bleak environment, Gibbs did his duty for several years, devoting a couple of days a month to the Freightways board. Davis retired in 1981, leaving Gibbs as a full director. Pettigrew stepped down as managing director in 1983, being replaced by Trevor Farmer, although he remained very powerful as deputy chairman, with a small but not insignificant personal stake in the business. He was also on the board of New Zealand Forest Products. Freightways suffered from the fashion for excessive diversification that afflicted most large New Zealand companies of the era. Under Pettigrew it had bought a tinned fruit company in the Hawke’s Bay. Pettigrew had also wanted to buy a joinery company, but Gibbs fought against the idea, arguing that companies have a limited range of talents and that trying to do everything wouldn’t work for long."

"Hauraki mightn’t have been Gibbs’ idea of a perfect investment, but it impressed his three teenage girls enormously; it was ‘cool’, and the pirate mythology of the station fitted with their image of their father. ‘Dad had always been a pirate in our minds,’ Emma says. The skull and crossbones flag fluttered above all of the Gibbs boats when sailing; fun, mischief, guns and sailboats were part of the family folklore."

"Gibbs’ scheme was good enough for the Hong Kong Bank (now HSBC), but since it didn’t operate in New Zealand special arrangements were required. In the end, Gibbs arranged that the Hong Kong Bank send a letter of credit to BNZ for $115 million which then endorsed Gibbs Securities’ bills of exchange. The BNZ endorsement turned the bills into first-rate paper. Gibbs then used Jarden and Co. (New Zealand’s largest broking firm) to sell the paper in the money markets. In a roundabout way, then, Gibbs and Farmer were effectively funding it themselves, putting no money in, but having gained the confidence of Wardley, the Hong Kong Bank and BNZ. The whole process had been made much easier by the financial deregulation that the government had passed over the previous months; Gibbs had been amongst the first to take advantage of the new freedoms."

"Gibbs handed over his A4 sheet of analysis, saying, ‘Look, James this is a good deal, we need funding, here are the facts.’ He then had to wait three months while Wardley’s analysts went to work on the figures to confirm Gibbs’ calculations. With that hurdle crossed, Gibbs hired Yonge as his investment banker for the takeover bid with a large success fee. The generous fee encouraged Yonge to pull all the strings necessary with his parent, the Hong Kong Bank, to lend the New Zealanders 100 per cent of the money required for the bid. Since Gibbs and Farmer were using a fresh company to make the bid, Tappenden Nominees, which had only $100 capital of its own, this wasn’t straightforward. Gibbs says:"

"The new Forestry Corporation was originally going to start functioning in September 1986, but it was held up by parallel work being done in other parts of the public service. The ideas in Gibbs’ model of a state-owned enterprise, operating under the Companies Act with staff who weren’t civil servants, fed into work also under way at the Treasury, led by Rob Cameron, Graham Scott and other officers, and at the State Services Commission, particularly after Roderick Deane took over as chairman on 1 April 1986.[42](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-42) It made sense to handle the state’s other commercial activities — such as electricity, Telecom and State Coal — in the same way.[43](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-43) Complicated legislative changes were required, which set back the new dawn until 1 April 1987."

"The privatised Freightways was the perfect set-up for Gibbs. He quickly stepped back, installed one of the former directors, Bill Wilson, as an independent chairman and left Farmer to operate the company from a small head office, trusting him absolutely and having great confidence in his ability as an entrepreneurial and effective businessman who understood the sovereign importance of cash flow. The two biggest profit earners of the restructured Freightways were the couriers and its stake in Chep pallet hire, which had developed a very effective computerised system to handle the awkward logistics involved in circulating pallets through the supply chain. With the couriers, Farmer developed a philosophy of having more than one entrant in each area of business. Freightways had several courier companies — Post Haste, Sub 60, New Zealand Couriers and Castle Parcels — all aimed at specific areas of the market, but overlapping. They were welcome to compete with each other. Each had different systems of distribution. Together they eventually accounted for more than 60 per cent of the New Zealand courier market. Couriers were the ultimate cash flow business since customers bought envelopes before they used them, and best of all, a lot of the envelopes were lost and never used. The drivers owned the vehicles and there was no stock, so the business generated huge cash flow returns with very little capital investment."

"Somehow Gibbs and Farmer had to orchestrate events so that maximum pressure could be applied to the board to agree to the sale of Mayne Nickless’ shares. Gibbs’ strategy was to launch into the market with a first come, first served offer of $1.70 a share for 27 per cent of Freightways, which, together with Mayne Nickless’ 24 per cent, would take them to 51 per cent ownership.[15](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-15) The price valued Freightways at $114 million.[16](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-16) The stockbrokers would line up the customers to purchase the 27 per cent the night before and so they’d have all they needed within a few minutes of the market opening in the morning. This would leave the market gasping for more. All those who had missed out would watch as the share price subsided back towards $1.38 and would begin clamouring for the opportunity to enjoy the same deal. And so it proved. Gibbs and Farmer launched on Wednesday, 27 March 1985, using Tappendens as their vehicle. They’d gained their 27 per cent by 10.15am.[17](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-17) Gibbs kept his public comments to a minimum, telling the *Dominion* only, ‘We thought it was a good idea.’ The share price settled back at $1.55 and the Freightways board had a problem on its hands. Shareholders who missed out demanded to know why the board hadn’t insisted their two fellow directors took 27 per cent of everyone’s shares rather than first come, first served. Valentine could only reply that he hadn’t known anything about it; but now his and his colleagues’ prestige as top company directors was on the line."

"Trevor Farmer and Gibbs each independently came to the view that the market was grossly undervaluing Freightways.[11](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-11) Few observers would have picked Farmer and Gibbs as likely partners. Legends of their early boardroom battles had spread through the industry.[12](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-12) Their backgrounds were also very different; Farmer was a self-taught businessman who’d moved from building to truck driving to freight forwarding. But Gibbs had sufficient respect for Farmer’s business abilities to approach him one day. He recalls saying to Trevor: *‘This share price is nuts. The market is still marking us down heavily due to de-licensing. You and I should buy this bloody company. I could raise the dough and we could make a packet.’ ‘Aw yeah,’ Trevor said. It was extremely casual. We never had an agreement between us in writing, and it’s not as if we were even mates at that point. But we had respect for each other and agreed to do it 50/50.*"

"Gibbs lived by a rule that if he couldn’t demonstrate the deal was successful on an A4 sheet of paper, it wasn’t any good."

"Once Gibbs and Farmer gained control of Freightways they had no time to lose; Gibbs remembers telling someone at a cocktail party he was paying $500,000 a week in interest, and he wasn’t exaggerating. But neither man saw the exercise as a big gamble. Farmer says: ‘We knew we could sell two businesses pretty easily; meanwhile the cash flow was good and wasn’t going to stop overnight.’ Gibbs carried out the pre-arranged deal with Mayne Nickless and then sold surplus assets, such as Grower Holdings, the canning business in Hawke’s Bay, Bandag, and some pieces of real estate, for good prices.After an intensive six-month effort they’d paid off the loan and everything left — including half of the best trading businesses, couriers, Armourguard, freight forwarding — was pure profit.[22](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-22) Roger France worked closely with Gibbs those six months. He was hugely impressed that ‘at no point did this huge deal they’d taken on feel out of control; everything landed pretty much where Alan had conceived it would land’.[23](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-23) Meantime, France observed, Farmer kept the businesses running like clockwork through an incredibly unsettling time with no damage to the cash flow or the management team."

"The nature of Gibbs’ involvement in Forestry Corp was similar to that of his role at Atlas, Freightways and Bendon. His style was markedly different to John Fernyhough’s, for example, who as chairman of Electricorp spent most of his working week in Wellington and operated as an executive chairman. Gibbs gave Kirkland clear direction and then limited his role to challenging, provoking and guiding — and then stepping back to allow the chief executive to do his job. After an initial burst in February and March 1986, he spent no more than two or three days a month on the task. Gibbs says he’s always been ‘very cunning at avoiding the time-consuming business of managing people or of getting sucked into detail’. As a result he was able to cover an extraordinary amount of ground in business and public service, while still retaining enough freedom to travel for as much as three months a year and to think of new schemes. When most of Gibbs’ counterparts could tell him what meeting they’d be attending in a year’s time, Gibbs worked hard to avoid commitments that denied him spontaneity. Wherever he was, in New York or Harare, Gibbs kept on top of his half-dozen work streams with a steady flow of handwritten fax messages, channelled through Jacquie Turner at the West Plaza office."

"During the critical months of the Freightways privatisation, Gibbs had other deals and projects running in parallel. His old ally Tom Clark had steadily increased Ceramco’s shareholding in Atlas until it reached 40 per cent by late 1984. Gibbs admits that blending an electronics and whiteware business with Ceramco’s bricks, crockery and engineering created a ‘totally inappropriate mix’ of companies, but ‘Tom was always wanting to buy something’ and Ceramco’s friendly stake shored up Gibbs’ and Bidwill’s control of Atlas. In July 1985 they went a step further and announced plans for a full merger of Ceramco and Atlas; Atlas shareholders were offered one Ceramco share plus 10 cents, valuing Atlas shares at $3.67, a 16 per cent premium on the market price.[24](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-24) Gibbs and Bidwill were praised for having spearheaded a classic recovery for Atlas’ shareholders from 25 cents in 1980.[25](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-25) When the merger was declared unconditional on 3 September the net result was that Gibbs and Bidwill became Ceramco’s largest shareholders, with 26 per cent between them.[26](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-26) Gibbs replaced John Fair as chairman of Ceramco; Bidwill took over as managing director. Interviewed soon after, Clark said of Gibbs: *He’s lean and tough but at the same time he’s got a cool, evaluating, analytical streak. He’s imaginative, a great people motivator; he’s dead honest, straight up and down — all the things I admire. We’ve had plenty of punch-ups. I don’t think the friendship would be any good without them. I used to win and now he wins. I’m prepared to give up the reins and let him go.*[27](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-27)"

"One of their trickiest challenges had been to contract out logging and routine work that under the old regime had been carried out by the Forest Service’s 5000 wage earners and contractors (a different category to the 2000 salaried staff). Gibbs had no doubt that contractors would be vastly more productive than employees. But how to move these foresters, all members of the New Zealand Workers’ Union, across to the private sector? Kirkland’s solution was to offer all the foresters a year’s work with the new corporation, with no guarantees beyond that, or a year’s pay as redundancy. Nearly everyone resigned with one year’s salary in hand. Schemes were devised to help many of them use the redundancy to buy logging equipment and get started as contractors. It was an unprecedented transformation of employment arrangements for former public servants in New Zealand.[46](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-46) Richard Prebble, later Minister of SOEs, was in no doubt as to its significance:"

"Under pressure from Douglas to come up with something quickly, Gibbs wrote a simple draft report over a weekend in late March 1986. This proposed a Forest Corporation that operated under the Companies Act with staff who weren’t civil servants and that delivered a return on the capital invested.[38](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-38) The official report, delivered in mid-May, fleshed out these ideas further and, more radically, suggested that the company should be listed on the stock exchange with every New Zealander given shares.[39](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-39)   Nothing happened for a while, however, until the report was finally released to the public on the Friday before Queen’s Birthday weekend without any significant ministerial comment.[40](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-40) Since no one from the government had spoken to him, Gibbs feared they’d chosen to bury it. A month later, in July 1986, he came across Roger Douglas at the airport and grumbled that he hadn’t heard anything. The Minister of Finance simply replied, ‘Oh, just get cracking.’ Gibbs had no real authority, nothing had been announced, no legislation had been passed, but he resolved on Douglas’ nod to forge ahead and put his ideas into practice. He’d keep going until someone stopped him."

"Gibbs found himself attending meetings of the chairmen of the nine organisations that would become New Zealand’s first state-owned enterprises (SOEs). Roderick Deane hosted these sessions and quickly realised that, handled correctly, Gibbs was a fantastic advocate for ideas. ‘Sometimes,’ Deane says, ‘I’d call him before the meeting of the chairmen and say, “Alan, I know where you stand, but before the end of the meeting you have to help me get to a conclusion,” and he was so powerful that he could bring the others into line.’ Deane also found Gibbs a useful ally to wheel out at critical sessions with his minister, Geoffrey Palmer."

"Gibbs became chairman of the new state-owned enterprise, with Kirkland as his CEO. The transition went smoothly, with neither strikes nor industrial turmoil, helped by the very generous redundancy on offer. Meantime, Gibbs and Kirkland had engineered a remarkable turnaround in the performance of the organisation by applying basic private sector principles of reducing costs and increasing returns. Overall staff numbers were reduced by 60 per cent, from 7070 to 2770, including contractors working full-time for the corporation. At the same time the battle was enjoined with the large private sector customers to increase prices for wood. The financial result for the taxpayer was dramatic. An operating deficit of $71 million in the 1986/87 year was transformed into a $61 million surplus in 1987/88.[48](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-48) Gibbs was rightly proud of the effort as ‘one of the most successful corporate reorganisations in New Zealand’s history’.[49](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-49) The resultant change in productivity was phenomenal."

"After the initial burst of activity from mid-1980 to early 1981, Atlas barely occupied three or four days a month of Gibbs’ time. Bidwill was the executive director while, even before his formal appointment as chairman, Gibbs’ style was to latch on to the topic periodically, testing and challenging Bidwill’s ideas, then letting him get on with it, while he kept his mind free for other opportunities."

"In his address as chairman of the combined company in September 1987, Gibbs took the opportunity to state the company’s objectives and philosophy, which first and foremost were to increase the wealth of shareholders.[52](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-52) From that, everything else flowed; in order to maximise returns, the business had to achieve excellence in its relations with employees, customers and the community. Gibbs didn’t want to follow the fashion for venturing beyond New Zealand and Australia; he’d seen too many failed attempts by New Zealand companies, including Ceramco, to conquer the world, and concluded that it was too difficult to be excellent everywhere."

"Gibbs tried to keep a low profile,[53](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-53) but like most businessmen he was interested in the progress of his peers. Later he said, ‘Business is like a yacht race: the only enjoyable place to be is in front and if you’re going to be a businessman, you judge yourself by how many bucks you’ve got in the bank.’[54](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-54)"

"Since Roger Kerr’s appointment as executive director in February 1986, the New Zealand Business Roundtable had become the most high-profile advocate of economic reform. Gibbs joined later that year. Roundtable events brought international speakers to New Zealand; Milton Friedman came several times, the economists and libertarians Thomas Sowell, Charles Murray and several others also visited. Gibbs thinks the best thing the Roundtable ever did was expose the country’s business leadership to these men and their ideas. ‘Most Kiwi business leaders had plenty of pragmatic ability. Now that generation were exposed to classical liberal ideas about the economy and public policy and it had a huge effect on the intellectual culture of New Zealand at that time,’ he says."

"The pause suited Gibbs well. He took his family on another of their safaris, this time to Ecuador and Peru. With three teenage daughters in tow, Jenny says a factor driving their choice of location was to find places where there would be no nightclubs. To her dismay, her daughters could find a nightclub even in the most out-of-the-way Peruvian villages. The Gibbs pondered the mysteries of natural selection on the Galapagos Islands and the rise and fall of civilisations at the former Inca city of Machu Picchu. In stark contrast to Africa, many of the animals native to Galapagos lived without natural predators and were absolutely tame, allowing the tourists to walk up to birds and swim with sea lions; at Machu Picchu the combination of human enterprise and nature, buildings imposed on the most impossible and dramatic landscape, struck Gibbs as the most beautiful place on earth."

"*Unshackling the Hospitals* recommended that as an initial step the roles of funder and provider of health services be separated. An independent National Health Commission answerable to Parliament would allocate funds to six regional health authorities, and they in turn would purchase services from the public, private or voluntary agencies in the regions to ensure there was value for money and competition over price. A market would then develop. That way the funder would have the ability to demand better performance from providers; payments would be for outputs achieved rather than a simple, crude reimbursement of whatever costs the public hospitals generated. To provide a level playing field all providers, whether public, private or voluntary, would pay tax, which could be reinvested in further services. Such a change, Gibbs predicted, would provoke a radical increase in the efficiency of hospitals."

"Towards the end of Gaynor’s period, aside from his major investments in Freightways and Ceramco, Gibbs’ portfolio consisted of a pile of cash, in excess of $100 million, and other public shares worth a mere $1.2 million. Gaynor remembers his boss worrying incessantly about the relatively insignificant parcel of shares. Gibbs, he says, was not a natural passive investor.[36](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477346-006497775-36) Meantime, Gibbs had made it his goal never to be in the position where he couldn’t write out a $20 million cheque that could be cashed the next day."

"The post-crash falls, however, reminded Gibbs that businessmen and bankers were perfectly capable of ‘going nuts’ during a boom and that the inevitable crash could bring down the strong as well as the weak. Already a conservative investor before the October 1987 crash, Gibbs became even more cautious. In mid-1987, when he was throwing himself into the health report, Gibbs decided to hire someone to look after his personal investments. He took on Brian Gaynor, who had recently left Jarden and Co. Gaynor lasted about a year and now describes his time with Gibbs as the most boring of his career, in terms of investment activity, because of Gibbs’ extreme conservatism."

"The Forestry Corporation, meantime, generated much satisfaction for Gibbs because the stunning turnaround in results continued. It also provided the opportunity for some contact sport with Fletcher Challenge, the nation’s largest public company. Fletchers had inherited cutting rights to large areas of forest from Tasman Pulp and Paper, with which it had merged in 1981. Gibbs was incensed that politicians, going back to the 1950s, had ‘let them get away with murder’ with contracts that had no escalation clause for inflation for 25 years and other such details.[38](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477346-006497775-38) He was determined to claw back some value for the Forestry Corporation and had lawyers trawl through the contracts to see what rights and powers they had."

"With a likely price tag of at least $2.5 billion, Telecom itself was beyond the capacity of any New Zealand company to buy on its own. Gibbs thought Fletcher Challenge, the biggest local conglomerate, might be interested — ‘Hugh Fletcher,’ he says, ‘wanted to buy everything, at a bargain price’ — but even they would need to partner with someone. The task therefore was to find a suitable international partner. So while Farmer was concentrating on negotiations with Telecom over Netways, Gibbs began to search on his own in the early months of 1989. He soon got wind that merchant bankers Fay, Richwhite were also tapping the walls."

"Alongside Gibbs and Richwhite, two Fay, Richwhite men, Rob Cameron, a former senior Treasury official, and Steve Walker (‘Wakka’), a young thruster, rounded off the core of the team. For a while they called themselves the ‘Steam Team’, after a local brew in San Francisco (Anchor Steam) which they’d drunk in large quantities on American visits. In May 1989, a few months into their quest for Telecom, Gibbs was stunned to learn that Michael Fay had successfully obtained a 30 per cent stake in the Bank of New Zealand for Capital Markets, a public company Fay, Richwhite controlled. Richwhite remembers Gibbs yelling, ‘Why the hell did you want to buy a bloody bank?’ ‘He rang up a few hours later to apologise and said it was an amazing deal, well done; but Gibbsie’s first reaction was right.’ It emerged that the BNZ was laden with bad debts, mostly in Australia, making the investment a sour one."

"But if that wasn’t enough, 1990 had also brought Gibbs another wonderful business opportunity. Earlier in the year he’d taken a call from Craig Heatley inviting him and Trevor Farmer to invest in Sky Television, his latest business venture. Heatley, 34, had been one of the stars of the 1980s, having started out with a mini-golf course on Tamaki Drive. By 1987 his public company, Rainbow Corp, controlled 55 per cent of New Zealand’s supermarket trade through Progressive Enterprises, 20 per cent of Woolworths in Australia and significant property investments. Cannily he’d sold the business to Brierleys a few months before the stock market crash of October 1987.[28](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477273-050103421-28) Casting about for something to do in 1988, he started talking to someone who had a horse racing television channel in Australia called Sky. At that time, he was on Brierley’s board and they owned Dominion Breweries. He came up with the idea of having a horse racing channel exclusively in DB pubs. When his Brierley colleagues passed on the opportunity, he followed it up personally."

"It provoked a celebrated court case driven by some disgruntled Lion shareholders, which, once solved, allowed the merger to proceed.[8](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477273-050103421-8) As a Lion director Gibbs watched the saga unfold and he was later drawn to observe: ‘David Richwhite is one of the most aggressive businessmen this country has ever produced, and I mean that as a heartfelt compliment.’[9](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477273-050103421-9) Having been hired by several of the new SOEs, including Telecom, to raise capital on international finance markets, Fay, Richwhite had deep relationships throughout the Wellington commercial and government worlds."

"Gibbs and Farmer called Fay and Richwhite in early 1989: ‘We think we should buy Telecom. There’s a huge play here, we can probably get it for a good price, but we can’t do it ourselves; we’d love to work with you.’ Gibbs said that he’d handle the deal from their end; after a short discussion at the other end, Richwhite was nominated as their leader."

"Richwhite negotiated the fee, which, if they were successful, would be very lucrative. Gibbs’ efforts to gain a slice of the business took longer to bring to fruition. Initially they thought in terms of joining the bid as fully paid-up partners with the Americans. In that scenario, their aim was to persuade the Americans to apply plenty of leverage to the deal. If, say, they bought Telecom for $4 billion with 75 per cent debt, only $1 billion worth of equity would be required. Freightways and Fay and Richwhite’s Midavia Holdings would need to find $100 million to take a 10 per cent stake. If the Americans went in with only 40 per cent debt, however, the New Zealanders would be scrambling to find $240 million for a 10 per cent stake. That would be distinctly less attractive."

"For Gibbs, the art of business is doing a few big things in a concentrated way. Just as the lion doesn’t waste its energy catching 100 rabbits when one zebra provides as much meat, leaving plenty of time for lying about in the sun, Gibbs’ approach to deal making was low-volume, high-yield. But he wasn’t the type to fritter away the lengthy downtimes between jobs."

"Then a few days before the bid was due, Gibbs ‘had a brainwave’. He now offered to commit to buying 10 per cent of the shares at the purchase price. They’d put down $20 million on settlement day and the rest, $380 million assuming a bid of $4 billion, would be due three years later. The Americans would fund them for those three years, while the New Zealanders would pay them interest on the outstanding money until they paid for the shares. Gibbs recalls: *That got the Americans’ attention. ‘Oh that’s a different deal,’ they said, ‘you’re committed to buy.’ And there it was: the greatest coup of my business career, the chance to make serious money. We’d own the shares but didn’t have to pay for three years; we’d put down $20 million, but that would represent only part of our merchant banking fee; we’d have to pay interest, but dividends would probably cover that, and unless something went badly wrong, in three years’ time the shares would be worth a hell of a lot more than the original purchase price.* But what if something did go badly wrong and Telecom shares went down over the following three years; what if Gibbs and his friends had to stump up another $380 million in 1993 for shares that were worth only $200 million? Gibbs hadn’t been prepared to take that risk. Under the deal that he prepared, Freightways and Midavia would buy the shares through a company, Carla Nominees, which only had $100,000 capital and they would give no personal guarantees. Furthermore, Gibbs took the precaution of securing their $20 million down payment against the shares. Bell Atlantic and Ameritech, for all their lawyers and checkers, overlooked doing the same for their $380 million, so if for any reason the New Zealanders didn’t pay they’d get their $20 million back before the Americans received any of their $380 million. And they were risking only $100,000. Carla Nominees had entered a binding contract to purchase the shares, but the New Zealanders had no risk. It was effectively still an option."

"Meantime, Gibbs and Richwhite ruminated constantly on how they could make the maximum amount of money out of the deal. Initially, reflecting their different mindsets, Richwhite concentrated on extracting the largest possible merchant banking fee from the Americans, while Gibbs focused on gaining an option to take an equity stake in the business. ‘The real value opportunity is to become a principal,’ he repeatedly said. Later Gibbs joked that he was happy to ignore the fee if he got an option, but Richwhite quickly decided that they needed the option *and* the fee. But Gibbs’ quest for a slice of the action was critical to their relationship with the Americans; as merchant bankers seeking only a fee, they were servants and the Americans were masters; as partners they stood more as equals."

"Exploratory travel to remote and obscure foreign lands, reading, working away on projects of interest, such as converting the population to free-market policies, designing the perfect boat, or figuring out where he could drive his new armoured vehicle, have been the sorts of things that occupied his restless mind. Having prospered through the period 1979–87 on the back of five or six sizeable deals, Gibbs had no need to return to the field. But his experience as a depressed hippy in the mid-1970s alerted him to the dangers of idleness. Enjoyable and stimulating though all his non-business pursuits were, none provided the thrill of a major commercial deal."

"Gibbs’ primary contribution came in mid-1991, a year after Sky was launched. As Coopers & Lybrand had predicted, the fledgling business was taking longer to get established than initially estimated; the New Zealand economy was in deep recession and subscribers were signing on in a trickle rather than the steady flow that Heatley had confidently anticipated. The business was losing $1 million a week, which gained everyone’s attention. Heatley hadn’t lost confidence but admitted that he’d underestimated the startup costs. He remembers Gibbs calling him up at home one evening and saying, ‘Craig, you promised me that if I put a little bit of money in Sky I’d have lots of fun; I’ve now got more than a little bit of money in it, and it’s no fun at all.’ Their solution was to bring in more investors to contribute around $100 million in fresh capital. They started talking to Gibbs’ partners at Telecom, Bell Atlantic and Ameritech, sowing the idea that this could be a useful experiment for them. In the United States telecommunications companies were barred from investing in cable television, so New Zealand would provide an opportunity for them to explore potentially interesting synergies between the two industries. Soon a consortium was drawn together comprising Bell Atlantic, Ameritech and two cable companies, Time Warner and TCI, and they began negotiating an appropriate price for 50 per cent of Sky."

"Gibbs and Richwhite pared back the Telecom task to its essentials. Rob Cameron’s team carried out a very detailed and robust valuation exercise; Richwhite thought they’d have to pay at least $3 billion, a lot more than their resources. The primary object, then, was to find the hungriest potential buyers overseas, since they’d pay the most and thus were most likely to win the tender. Gibbs and Richwhite divided responsibilities; Richwhite dealt with Telefonica in Spain, BT and several American companies, while Gibbs concentrated on other Americans. As early as May 1989 Gibbs had met with Bell Atlantic. He quickly concluded that they and Ameritech, another US firm, were ‘the hottest to trot’."

"In a decade of deal making, this one had brought Gibbs close to heaven. The $4.25 billion privatisation of Telecom proved to be the sixth largest deal done anywhere in the world in 1990.[24](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477273-050103421-24) The merchant banking fee that the Americans would pay Freightways and Fay, Richwhite, which they calculated at $52 million, was unmatched internationally that year. Gibbs was cock-ahoop. It had been a great team effort that combined the determination and deal-making brilliance of Gibbs with the breadth of talent and relationships that Richwhite had fostered at his merchant bank. The Telecom deal was also Richwhite’s proudest moment in business. He summed up their collaboration: ‘Gibbs wouldn’t have won it without us; we wouldn’t have made so much money without Gibbs.’[25](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477273-050103421-25)"

"Gibbs was happy now. As September 1993 drew near, when Freightways and Midavia Holdings had to buy their 224 million Telecom shares from the Americans at the privatisation price of $1.81, the share price was floating upwards towards the $4.00 range. Gibbs’ and Farmer’s pay day arrived when they outlaid around $200 million for their 112 million shares and immediately sold 67.5 million on the open market for $256 million (at an average price of $3.80 a share). They’d made more than $50 million instantly and still retained 50 million shares, with a market value of $210 million. Gibbs was convinced these shares would continue to rise in value; Fay and Richwhite, who had other pressing calls on their money, sold down their shareholding more rapidly.[41](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477273-050103421-41) Brilliant negotiations in 1990 and the insistence of a second round of restructuring in 1992 to set the company back on track had produced the highlight in a successful career of deal making. Real money is often made at the point of discontinuities: when seismic shifts occur in the economy, such as from a regulated environment to a deregulated one, or from state enterprise to privatisation. Such conditions provide the opportunity for a few smart entrepreneurs who are in the right place at the right time to prosper extraordinarily. But, as the purchasers of the Bank of New Zealand, New Zealand Steel and the Central North Island Forest discovered, there was nothing automatic about profiting from privatisations."

"Gibbs found himself defending their fee at a negotiating session at the Halekulani Hotel in Hawaii. At times the process was seriously unpleasant. Once again, it was three or four New Zealanders across the table from a lineup of dozens of Americans. Working on the principle, however, that ‘the art of a good deal is to make the other guy feel he’s won’, Gibbs concentrated on yielding, after much anguish, concessions that made his partners feel like they had made substantial gains, while at the same time proposing seemingly innocuous gestures in return that actually more than balanced in value everything that he had conceded."

"Meanwhile, Gibbs’ nephew Andrew Wall, his sister Wendelin’s oldest boy, had been investing in commercial property in Wellington and spied another good opportunity in May 1991. The New Zealand Railways Corporation was selling a large parcel of surplus properties, some 2700 in all, scattered throughout the country. The tender documents said that, all together, the leases generated just over $7 million a year, but information about the individual properties was sketchy. Everyone knew the parcel would include ‘the good, the bad and the ugly’.[31](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477273-050103421-31) Having seen the mismanagement of assets in the Forest Service, Gibbs knew that the Railways Corporation’s property book would be a mess. As well, since the country was in the middle of a severe property slump, he knew that there wouldn’t be much competition from other bidders. Wall and Gibbs combined with Gibbs’ former Unity colleagues, Mark Wyborn and Adrian Burr, to take the lot for around $55 million. Gibbs and Wall took all the properties south of Taupo; Wyborn and Burr took those to the north. In Gibbs’ assessment, the sale wasn’t handled well by the Crown: *The government’s neglect of the business it owned was mind-boggling. We bought blocks of land that at our purchase price yielded 14 per cent per annum and yet half the leases hadn’t been reviewed for 10 years. There were bad debts that hadn’t been collected; it was a shambles. Then to cap it off, the government failed to deliver us some of the properties, so we sued it for incompetence. The damages we received were nearly half the purchase price. It was a perfect example of how poorly the state looks after its assets.*[32](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477273-050103421-32)"

"At the last session Gibbs tried a new negotiating technique. The big issues had been agreed, but 18 outstanding matters remained on the table. He feared they could drag on for another two days when he wanted to catch a plane home. So he announced to the assembled Americans that he had to leave in an hour to catch his flight: ‘I propose we auction the last 18 matters: you have the first one you want, I have next choice, then you next, and so on.’ The room broke up hysterically. *Ameritech’s Jeff White said you can’t resolve serious things like a lottery. I said, why not? Someone piped up, ‘We’ll take this.’ OK. There was* *uproar. Half the room was screaming it was cavalier; the other half was enjoying the fun. White realised it wasn’t the end of the world and started playing the game and it was resolved just like that. And since I knew the ones I really wanted, we gained a few points and gave away nothing of consequence.*"

"Gibbs discovered his favoured management technique when reading a biography of Howard Hughes, the American engineer, aviator and industrialist, who held on to great businesses and wealth while seldom venturing from his top-floor hotel suite. ‘He’d spend his time receiving detailed reports and writing notes on them,’ Gibbs says. ‘Everyone knew that Howard was watching what they were doing and that he cared.’ From his desk in London or at The Farm, Gibbs adopted the same principle, receiving regular reports from each section head and sending up to 20 faxes (and later emails) a day to key people on the team."

"There were, however, some intriguing leads. United States Navy representatives had rung several times since the Aquada’s public launch in September 2003, wanting to look at the technology. Various branches of the US military had been trying for decades to produce high-speed amphibians and the sentiment they expressed to Gibbs was ‘if it could be done, we would have done it’. However, they were keen to investigate his machine with a view to using something like it for reconnaissance and intelligence missions."

"While Gibbs was back in London wrestling with the next stage of the amphibian project, *Senses* was taken hundreds of miles up the Amazon River to Manaus, a city of more than a million people in the middle of the jungle. Since they were thought to be amongst the first foreign private cruisers up the river since the murder of the New Zealand yachtsman Sir Peter Blake outside the violent river town of Macapa at the end of 2001, they’d taken the precaution of having an armed Ghurkha on board. Gibbs arrived in August 2005, and they prepared to travel up the Negro and Solimoes arms of the great river system upstream from Manaus. The Negro runs black but clear, like tea, while the Solimoes flows brown and muddy. When the two rivers meet at Manaus the currents and eddies produce elegant black and brown swirls that from the helicopter looked like works of art."

"While the Gibbs clan summered in New Zealand from January to March 2005, *Senses* sailed to the Caribbean in preparation for a season of exploration in Central America. Gibbs joined the boat in Belize in April 2005. As it cruised south towards Panama, Gibbs flew with his daughter and new son-in-law to towns throughout Guatemala, Honduras, Nicaragua and Costa Rica. In Panama, they visited their friend Johnny Pigozzi, the son of the founder of the French car maker Simca. He’d developed the Liquid Jungle Lab, an ecological research outpost there. Gibbs and Pigozzi wandered about discussing butterflies and the infinite variety of nature in a steaming jungle."

"Through this difficult period Gibbs had a helpful distraction. In October 2003, just after the Aquada’s public launch, he’d bought a boat in partnership with Douglas Myers. No ordinary boat, *Senses* was a 59 metre, 1000 ton ship, equipped with two helipads, one helicopter and a flotilla of small craft, including a charming 12.8 metre Nelson tender and a Halmatic Atlantic 24, a high-speed rigid inflatable favoured by the British military. *Senses* had a crew of 14. *Senses* was designed to be equally at home in the Arctic or Saint-Tropez, and best of all, for Gibbs, it had a ramp at the stern up which he could drive an Aquada. With the helicopter, Aquada and other boats, *Senses* was really a luxury base for exploration. When cruising up the coast from Barcelona to Nice it was possible to fly into Perpignan for a bistro lunch, or drive the Aquada in."

"Much of his historical and biographical reading is directed by his travel. A favourite Gibbs aphorism is, ‘The more interests you have, the more interesting life is.’ ‘To see Yugoslavia, Iran, North Korea, Afghanistan after the Taliban fell over, the copper mines north of Santiago, or to travel with the kids through areas of north India where they were fighting,’ he argues, ‘is a great source of stimulus. The consequence is that whenever you see anything about those places in the news, you’re interested.’ A biography of the great Victorian explorer Henry Morton Stanley is much more interesting when you’re just about to visit the Congo."

"Glamour and publicity now followed Gibbs at every turn. He had a new girlfriend, the beautiful French Tahitian Sandra Baker, and was enjoying life. A great story on the car appeared in the August 2004 edition of *Top Gear* magazine, based on an interview with Paul Walton in Monaco. ‘Splash and Dash’ was the headline. ‘Making an entrance at the Monaco Grand Prix gets trickier every year,’ Walton wrote. ‘The Ferraris, the yachts, the helicopters — it’s all so depressingly uninspired. But the amphibious Gibbs Aquada, now that’s a toy that’ll get them rubbernecking.’ Driving through Monaco, Walton observed that the Aquada received more attention ‘than all the resident supercars put together’.[24](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477408-606132179-24)"

"Through this difficult period Gibbs had a helpful distraction. In October 2003, just after the Aquada’s public launch, he’d bought a boat in partnership with Douglas Myers. No ordinary boat, *Senses* was a 59 metre, 1000 ton ship, equipped with two helipads, one helicopter and a flotilla of small craft, including a charming 12.8 metre Nelson tender and a Halmatic Atlantic 24, a high-speed rigid inflatable favoured by the British military. *Senses* had a crew of 14. *Senses* was designed to be equally at home in the Arctic or Saint-Tropez, and best of all, for Gibbs, it had a ramp at the stern up which he could drive an Aquada. With the helicopter, Aquada and other boats, *Senses* was really a luxury base for exploration. When cruising up the coast from Barcelona to Nice it was possible to fly into Perpignan for a bistro lunch, or drive the Aquada in."

"The product itself was a great motivator; many people wanted to be part of a team that introduced such an exciting new product to the world. But Gibbs’ powerful brand of leadership was also necessary to sustain the team through the hills and valleys of the project. It was obvious to everyone that he believed fervently in the idea. Many of his workers responded to his clear emotional commitment to the project with great efforts of their own, so as not to let him down. But passion alone is insufficient; Gibbs knew every problem that they faced and had wrestled with it in his own mind. He’d review each programme of work regularly, not letting any matter go until he’d fully understood why something had been done a particular way or until he’d laid down a fresh challenge. Of the long-servers, Steve Bailey heard Gibbs’ favourite line many times: ‘If it had been easy, people would have done it before.’ Alan Wells toiled in the workshop and on the lake all hours to get the various vehicles operating. For a young guy from a modest background, spending time with Gibbs was a revelation. He says,"

"The sales-intent amphibians had 3178 different parts, each of which had to be bought or fabricated. Handling this volume of parts created a major logistics exercise, requiring serious quality control systems. As they relied on dozens of suppliers, most of whom didn’t have access to the sophisticated CAD systems that Gibbs had used, this phase led to many more headaches. The hulls were perhaps the trickiest part to get right, and the SIA programme was held up several months as many hulls were rejected. SIA 1 finally rolled off the production line on 20 February 2003."

"*At heart, Alan’s a frustrated engineer. He loves solving problems and he’s good at it; he’s had an awful lot of valuable input into solving lots of the problems. In terms of management structure, having your co-owner wandering around engaging with the engineers and technicians could be disastrous, but Alan quickly sorted out a working formula. Anyone was free to take his advice, but if they adopted it, they had to own it absolutely. Nobody could say they were doing something ‘because Gibbs said so’.*[2](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477408-606132179-2) Gibbs had a sign erected on the wall to reinforce the point: *Alan Gibbs questions, challenges, and suggests ideas. These are not instructions, those come through line management. If you adopt Alan’s* *input it becomes yours.*"

"Gibbs’ arrival at the testing lake always generated a nervous frisson amongst the technicians. Alan Wells, one of the longest serving techicians, groans as he remembers that whenever Gibbs turned up he’d break the machine: *It was always frustrating for us because it was invariably something that we didn’t think would fail and Alan, who only knew one speed and that was flat out, would break it. It was either that or he’d be getting us to push it to the limit. One day at the lake he was on a high, punching his fist in the air, wanting us to drive into the water as fast as we could. ‘Faster, you wimps,’ he was yelling. We did it at about 25 mph and I was thinking to myself, ‘Where’s it going to end?’*[4](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477408-606132179-4)"

"Afghanistan had been a nice diversion. Back in London, however, not everything was going according to plan for the Aquada. The cars were being built, and the invention had received numerous golden accolades. *Time Magazine* named it as one of the ‘Best Innovations of 2003’. A feature on design in the *New York Times* highlighted the car.[19](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477408-606132179-19) Leader writers fought over good lines to tell the story. The *Daily Telegraph* alighted on ‘Drink Driving — could Aquada be the ultimate plaything?’[20](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477408-606132179-20) But Gibbs’ basic business plan, to wow the world and then find a car manufacturer to make it under licence, wasn’t coming off. To his great annoyance every company they approached said that he hadn’t demonstrated the size of the market, therefore they couldn’t measure whether there’d be a return on their investment. They also worried about the effect of US product liability laws on such a radically new product. On reflection Gibbs concedes, ‘Quite naturally, people were sceptical as hell; would it work in salt water, could it handle rough conditions, would its complexity frighten customers, was it too expensive?’ Jenkins laments, ‘Our licensing idea fell on stony ground at that point; we needed someone with the balls to create the market and no one materialised. So Alan had to do it himself.’[21](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477408-606132179-21)"

"Gibbs had that mysterious alchemy in his personality that inspired great efforts; he was equally capable of providing entertainment. Adrian Locke, a finite element analysis engineer who did a lot of the work on the Aquada’s body structure, remembers showing Gibbs a new body material called Twintex. He’d laid it between two chairs to show its strength and was stunned when the 62-year-old Gibbs climbed on top and began bouncing up and down on it. ‘Yeah, it’s bloody strong stuff,’ he yelled.[8](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477408-606132179-8)"

"The stories and pictures went worldwide through network stations and the web. In Britain all the major dailies carried pictures of the Aquada: the ‘ultimate boy’s toy’. One declared that the launch ‘resembled an action sequence from a James Bond film’.[10](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477408-606132179-10) Gibbs couldn’t have dreamed of a better product launch. Back home in New Zealand, the local media adopted the story with gusto, celebrating a Kiwi entrepreneur’s success on the world stage. A *New Zealand Herald* reporter immediately tracked down Terry Roycroft to see if he’d been treated well and reported that he was ‘chuffed’ with the breakthrough and felt himself very well looked after by Gibbs.[11](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477408-606132179-11)"

"Salvation came from an unlikely quarter. Jenkins spent a lot of time with Steyr, an Austrian firm that made PTOs, trying to resolve their problem with the GM PTO. In frustration he asked them one day to nominate their best PTO; they pointed to the one attached to the Land Rover Freelander engine, the KV6. Jenkins went back to London, bought a Freelander, ripped the engine out and started tests on its PTO. Its performance was an order of magnitude better than anything else they’d tried. The KV6 was also a tidy engine that delivered the power they needed and was very compact. The next problem was to persuade the owners of Rover to let them use the engine for the project, which they did only after Gibbs had been through ‘somersaults and hoops of burning fire’."

"In November 2003, while the tests continued, Gibbs took off for another overseas adventure; this time to war-torn Afghanistan. Societies exposed to extreme regimes continued to fascinate him. Since visiting North Korea in 1999, he’d explored Bhutan, the closed society in the Himalayas, and Albania, the small country that for most of the twentieth century had tried to turn its back on modernity. In 2003, the great issue of the moment was the War on Terror, with Iraq and Afghanistan the primary theatres of the great struggle. Quite aside from the opportunity to witness Afghanistan’s contemporary travails first-hand, Gibbs was attracted by the rich layering of history that he expected to find in a region that had provided the traditional crossroads for Asia for millennia. In London Emma had met Robert Pelton, a Canadian journalist who specialised in books and articles about the world’s most dangerous places.[14](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477408-606132179-14) Gibbs proposed a deal; he’d pay Pelton’s airfare to Afghanistan if he showed them around. Thus began one of his great adventures."

"Gibbs presents an interesting paradox in the sense that his personality is intensely restless and rarely satisfied, driving a ceaseless search for new forms of stimulation, but so far as his money is concerned he has long since been satisfied and his search for stimulus has never extended to a desire to put it at risk. Telecom acquisition team member Steve Walker remembers Gibbs ruminating late one evening after a meal in Philadelphia in 1989 while they were chasing the Telecom deal: *Alan told me, ‘Look, I’ve got 100 million dollars,’ or some such figure. ‘It wouldn’t make a scrap of difference to my lifestyle if I had another 100 million dollars; but it would make a big difference and would seriously piss me off if I lost $50 million.’*[18](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477355-616451090-18)"

"Characteristically for Gibbs, his investment in the Viaduct was low risk. He’d leveraged the financing of the purchase so that it had required only a modest initial equity input. Then Viaduct Harbour Holdings took no part in the chancy business of property development; it leased land to developers and focused on guiding and influencing the quality of the developments so that the value of the underlying land grew. From Gibbs’ point of view, once the framework had been set, his stake in the Viaduct could be retained indefinitely as a passive investment."

"Serra is a rare artist who appears to enjoy and welcome input from others. Gibbs and Noel Lane chipped in with ideas. Of Gibbs, Serra said, ‘You know as kids there are some people you like to play with because you can make a quantum leap and some with whom you can’t; Alan is a great guy to play with.’ They built a wooden framed mock-up of the wall to gain a sense of how it sat in the landscape and a feel for how high it needed to be. Soon Serra and Gibbs fell into a debate about the material to be used. Serra wanted it to be steel, the material used in most of his works. But with the lean, he thought 4.8 metres high was the limit of what could practically be manufactured. Gibbs was insistent that 4.8 metres didn’t generate sufficient drama. He wanted six metres, and since at that height using steel would be a massive undertaking, they should build it in concrete. Serra stuck to his guns: *Why does it have to be in steel, why couldn’t you build it in plastic, why couldn’t it be in any other material? I came to a conclusion if you’re interested in inventing form, interested in matter, one of the things you understand immediately is that matter imposes form on form. I thought to win this game I had to humour him along enough and just outlast him. And I’m going to walk if he doesn’t want to do it. And I did. I really wanted to build it in steel or not at all.*[7](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477365-869846975-7)"

"Parallel to Cameron’s valuation effort, Gibbs did his usual single piece of A4 paper analysis of how much Telecom might be worth: ‘It wasn’t hard for Telecom,’ he says. ‘It was a lovely, fat company, with huge margins and a lazy balance sheet. It was obvious that if you could keep the margins it would be a fantastic business.’ He told the Americans that they wouldn’t get it for less than a price-to-earnings ratio of 12, which with earnings a little over $300 million, put the price around $4 billion. It was a long, steady process to reveal to them the value in the business."

"However, in 1995 when he’d seen that the Ports of Auckland were selling 18 hectares of waterfront land immediately west of the CBD, Gibbs thought back to the value that had been lying dormant in the surplus railway land in 1991: ‘I knew it would be a mess, that no one would see the value in this tangle of leases and that there’d be an opportunity.’ Farmer, meantime, had earlier been shooting in Britain with a party that included the Duke of Westminster. He’d been enthused about the power of long-term leasehold estates with returns that adjusted for inflation. Gibbs and Farmer prepared to compete for the land, but once again discovered that the other most serious bidders, Gibbs’ and Farmer’s old Unity colleagues, Mark Wyborn and Adrian Burr, were people they knew and it made more sense to work with them."

"Nor was there a cure for the intense natural curiosity that compelled Gibbs to seek further stimulation. Over Christmas 1996 Gibbs caught up with his old friend Douglas Myers at his Matauri Bay farm. Two of country’s richest and most successful businessmen ruminated there over the fact that they both always felt dissatisfied. They concluded, after several wines, that it was genetic. People were either by nature happy and contented or dissatisfied and discontented.[14](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477351-409220225-14) The trick, if you were of the latter persuasion, was to use the resulting restlessness as an energising force, driving you on."

"The dominant mind-set in Detroit, Gibbs discovered, was completely orientated toward high-volume manufacturing and intense specialisation. If you weren’t making 100,000 units of something, nobody was interested. And it was impossible to find anyone who had designed a car, only people who had spent their entire careers designing door handles, fuel pumps, window wipers or other such small pieces of the jigsaw. When they tried to find someone to design the electrical harness — the vehicle’s wiring — the best they could manage in Detroit was a subcontractor who offered to put together a team of 10 people to do the job. That didn’t suit a small start-up company. Gibbs wanted one person who could take responsibility for design and manufacture. Jenkins had to travel to Chicago to find someone, and he came from the whiteware industry."

"Eventually, in September 1996, Gibbs, Farmer, Wyborn and Burr formed a new company, Viaduct Harbour Holdings Ltd (VHHL), to buy the block for $74 million.[2](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477355-616451090-2) Gibbs and Farmer each had a quarter share. Immediately they set about the creative task of transforming a large area of rundown vegetable markets, fishing sheds and warehouses into something special. Team New Zealand’s 1995 victory in the America’s Cup yachting competition and subsequent plans to defend the cup in Auckland created a powerful stimulus for the development. Rob Campbell, their CEO, remembers that Gibbs poured ‘huge enthusiasm’ into the project through 1996 and 1997, weaving a study of waterfront development and a search for the world’s best waterfront designer into his extensive travelling at that time. ‘Never mind Auckland,’ Campbell says of Gibbs’ approach, ‘this should be world-class.’"

"He was leaving New Zealand while at the very height of his powers. Gibbs was one of the nation’s half-dozen wealthiest individuals, a leading director of its biggest public company (Telecom), co-owner of one of its most successful private companies (Freightways), a major shareholder in one of the nation’s most promising start-up companies (Sky Television), which was soon to go public, a director of its largest brewer (Lion Nathan), as well as a leading member of the Business Roundtable and of the ACT party. He might have looked forward to a gentle transition into Grand Old Man of New Zealand company directorships and a stalwart of the cocktail set. But such a lifestyle never held much appeal to him. In his late fifties he wanted fresh challenges, not to ride on past accomplishments."

"As a holding company, Freightways held many businesses, each of which Gibbs and Farmer sold in three large transactions in mid-1997: Armourguard, New Zealand’s largest security firm, was sold to US public company Tyco International for $33 million ($44 million in current terms); CHEP, the pallet hire business, went to Brambles for $55 million ($73 million in current terms); and Freightways Express, which contained the nine courier businesses, they sold to Ausdoc, an Australian publicly listed company, for $125 million ($167 million in current terms).[4](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477355-616451090-4) With hindsight, Gibbs thinks they may have made a mistake selling the courier businesses:"

"There were certain rules, however. First, they only ever took hand luggage, since Gibbs couldn’t bear waiting around at carousels for large bags to turn up. Second, nothing could be organised from New Zealand. The standard procedure was for them to lob themselves into a new country, then find someone who was likely to give them the best experience. In Cuba, they’d met a roadside cigar-seller and paid him to drive them around the island while Gibbs quizzed him on every aspect of his life. On a trip to Borneo, also in 1996, Hartley had broken the rule and tried to organise a guide beforehand, but as soon as they arrived and the guide explained what he intended to do, he knew it would be too boring for Gibbs. Hartley recalls:"

"Gibbs returned to Russia in 1997, and then ventured southwest into Ukraine, which was only six years into nominal independence from Moscow. The Ukrainian economy wasn’t strong and Gibbs had learnt through someone he’d talked to that it was possible to rent part of the Ukrainian army ‘for a few drums of diesel’. He took a couple of his nephews and spent the best part of a week at a camp having fun as these bored and often drunk soldiers fired up all their machines and let the New Zealanders drive them around. There were bridge-laying contraptions, large diggers, old helicopters, amphibians of various sorts and hundreds of tanks. As Gibbs surveyed the dead flat countryside from the driver’s seat of one of these beasts, he understood the region’s recent history with new clarity. There was nothing to stop his advance east or west for thousands of miles."

"Jenkins suggested that Gibbs turn his attention to the two places in the world with excellent low-volume, specialist cultures for car making: northern Italy and the British Midlands. Since Gibbs spoke no Italian, it made sense to look first at the Midlands. In the UK half a dozen companies, including Morgan, Aston Martin, TVR and Lotus, manufactured cars in low volumes. They were supported by engineers with the sorts of skills and mind-set that Gibbs needed. The decision was made; Jenkins merged his business with Gibbs’, and Gibbs and Jenkins became partners. The project moved across the Atlantic. In Neil Jenkins, Gibbs had found a Trevor Farmer-like figure to help him with the car project. Since the engineering challenges fascinated him, Gibbs would have a more hands-on role than he had had with his former businesses, such as Freightways and Ceramco, but he’d long since learnt that he needed a trusted and capable partner on the spot."

"So Gibbs had left Telecom by May 1999. Ironically, soon afterwards Craig Heatley and the others on the Sky board went cold on their proposed acquisition of ihug, which had been the actual trigger for Gibbs’ departure from the Telecom board. Sky, meantime, had been an excellent investment for Gibbs and Farmer. The US grouping of Ameritech, Bell Atlantic, Time Warner and TCI, which Gibbs had helped to bring in as 50 per cent shareholders in 1991, had provided the company with the additional capital it needed to get established with two excellent executives in Nate Smith and John Fellet. But the American partnership was inherently unstable because of the rivalry between its constituent companies. In August 1997 Heatley engineered the sale of the Americans’ stake in Sky to Independent Newspapers Limited (INL), a New Zealand newspaper company that was controlled by Rupert Murdoch’s News Corporation.[15](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477355-616451090-15) Then a few months later, in November 1997, Sky had its initial public offering."

"First up, in 1992 Gibbs commissioned New Zealander Chris Booth to make him a sculpture. The idea was that the artist would spend time on the property and that the landscape would influence the art. Booth spent a week sleeping at the barn and wandering around the property until he saw the stone on the waterfront. He later wrote: *When the tide is low, tilted sandstone strata formations are strikingly visible as strong lineal patterns interspersed with rock pools. Close by is a vast estuarine intertidal zone of water tolerant plants and floodways which, from above, resemble a graph of dots and dashes. These along with the remoteness, the exposure to winds and the erosion of the land, were the predominant inspiration for the sculpture.*[37](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477309-807254973-37)"

"In 1993 Lane was commissioned to build a farmhouse overlooking the Kaipara Harbour, one of the largest harbours in the world. The harbour massively increases the sense of scale of the property. Once or twice a year a boat would go past, but most of the time Gibbs looked out on to a vast and empty scene. Shallow and sandy, the tide goes out a mile from Gibbs’ property. Since it faces west, The Farm looks out to amazing sunsets, intensified at low tide by the sun reflecting off the wet sand, with its ever-changing pattern of ridges."

"‘Unless I’ve got superior information,’ he says, ‘and I know it’s superior because I’ve developed it, investing in particular stocks and bonds is just punting.’ Gibbs continued to put most of his money in the bank. When people asked for advice on shares, he told them to invest in funds that followed the market index. Picking winners, he argued, was futile for most people."

"*I never found Alan easy to chat to; his intelligence was so ferocious that if you got into a conversation with him, within two or three minutes you were conscious of this enormous challenge being hurled at you. But Trevor handled it easily. He could say, ‘Oh bullshit, Gibbs,’ when he was overstating his case and that would get things back on track. I never saw anyone else do it; I certainly didn’t.*[34](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477309-807254973-34)"

"Freightways also continued to prosper. The character of Gibbs’ involvement in Freightways remained his ideal for any business enterprise. He’d sit down with Farmer regularly and together they’d work through a list of issues: ‘We’d agree on everything and Trevor would go away and do it,’ Gibbs remembers. He never spent hours studying routes for couriers or worrying about what trucks to buy; nor did he worry about managing the 3200 people working for Freightways’ many businesses. Roger France, who had been their CFO from 1985, watched the Gibbs–Farmer partnership from close quarters."

"in Telecom’s case from the significant productivity gains generated by changes inside the company and from investment in technology following its transition from government to private ownership, Gibbs saw that Telecom’s golden run would end sooner or later."

"Gibbs’ style was an object lesson. ‘Alan would hit on only a couple of things during Freightways board meetings and they would always be of substance,’ he says. ‘While I’d think a little bit about everything, Alan would have thought deeply about a few things, the things that mattered, which on reflection is a better approach.’"

"*Alan didn’t have a high opinion of professional directors, but my sense is that he would have tackled Fletchers because he believed it was on the wrong track and it was his duty as a New Zealander to respond if asked. At the same time he was getting stuck into producer boards, calling for deregulation and reforms, so he never shied away from the big issues. It would have been a fascinating moment in New Zealand corporate history if he’d joined Fletchers, explosive even. He would have bitten hard and sought to re-orientate the company towards the interests of its shareholders. He’d thought very deeply about the nature of capitalism, about the rights of shareholders, the purpose of a company, in an intellectual way that was so unusual in New Zealand, and diametrically opposed to Hugh Fletcher’s view of the world and the pervading culture at Fletchers. Gibbs’ arrival would have been a takeover, in effect. The divisional heads would have had an entirely new experience, and it certainly would have been the end of Hugh.*[31](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477309-807254973-31)"

"Having helped set the ball rolling, Gibbs stepped back, much as he always had with a business, confining his role to asking difficult questions and proposing fresh ideas at strategy sessions. Roger Douglas continued to be struck by Gibbs’ restlessness. ‘He was always out at the sharp edge, looking for better ways of doing things,’ he says.[18](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477309-807254973-18) Money was his other prime contribution. Some years later, the party’s finances were leaked to the *Sunday Star-Times*. They revealed that Gibbs and his associates put $4 million into ACT’s 1996 election campaign, a huge sum in the context of New Zealand politics."

"Gibbs had kept in touch with Roger Douglas since his exit from politics at the end of 1990. In 1992 he encouraged the former finance minister to write a book which tested his understanding that most of the money governments took in taxes was simply recycled back to the middle classes through the superannuation, education and health systems. The churning cost a lot but didn’t achieve much redistribution of income from rich to poor. Rodney Hide was dragooned to help with the book in the early months of 1993. Richard Prebble, who remained the Labour MP for Auckland Central until the 1993 election, helpfully asked a series of questions in the House. Treasury’s answers provided much of the research for Douglas’ book.[15](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477309-807254973-15)"

"Friedrich Hayek’s writings inspired Gibbs, shaped his thinking and sometimes provided the best words to articulate his thoughts. The Austrian economist’s last book, *The Fatal Conceit,* published in 1988, was his summation of the case for why socialism had failed.[3](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477309-807254973-3) Gibbs thought Hayek’s insights were stunning. His basic contention is that the civilisation we enjoy and which maintains the billions of people alive today depends on what he calls ‘the extended order of cooperation’, which is routinely known as market capitalism. And secondly, that the extended order of cooperation arose not from human design or intention, but spontaneously. Some humans struck upon certain traditions that worked best and through the process of cultural evolution they came to dominate. The ‘conceit’ came about in the modern era when intellectuals, a group for which Hayek had nothing but scorn, supposed that mankind must owe all the advantages and opportunities that civilisation offers to deliberate design rather than to the mere following of traditions."

"These insights resonated powerfully with Gibbs. He’d been struck not by how much people knew about the world and the economy, but by how little they knew. How on earth would a few bureaucrats, such as himself as a 26-year-old sitting on the interdepartmental committee deciding what imports to allow into New Zealand in 1966, know what was best? Was it more sardines they needed, or shoes? Surely the millions of voluntary decisions made every day by millions of people in a free and open marketplace were more likely to generate the necessary wisdom than a bureaucratic panel? Gibbs had travelled around Eastern Europe many times and seen many factories built under communism that were empty and abandoned. Either they had been built in the wrong place or their products did not have a market. So much of the planners’ investment was completely wasted because they had not used the market to allocate resources."

"He then mounted a classical defence of the free market, which he argued generated and reflected real cooperation between men: ‘The key to running a successful business is to provide the goods and services that people want. That’s how I do my bit for my fellow man. I don’t pretend that I do my bit out of the goodness of my heart. That would insult people’s intelligence. I do my bit out of my own self-interest.’ Anderton mocked the ‘trickle down’ theory; Gibbs argued that while private enterprise is based on voluntary transactions, government enterprise is coercive: ‘Citizens are compelled to pay taxes and follow the government’s dictates.… The tyrants of history have all been politicians; none have been businessmen going about their business.’ It was an interesting debate between two diametrically opposed political philosophies. From Perigo’s point of view, however, Gibbs was holding back. He should have shouted from the rooftops that ‘greed is good’ and been done with it."

"A public stoush between Gibbs and Jim Anderton in August 1993, however, showed up some differences between Gibbs and Perigo. Anderton accused Gibbs of saying ‘greed is good’. Gibbs denied it, demanding that Anderton substantiate the claim, which he couldn’t do. In fact, he’d talked about the virtue of self-interest. ‘Greed,’ he wrote to Anderton in one of a series of letters that were later published in the *National Business Review,* ‘is the insatiable desire for something. Greed is one of the seven deadly sins. The pursuit of one’s own long-run self-interest is quite different. It doesn’t imply excessive desire and it doesn’t convey moral disapproval.’[10](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477309-807254973-10)"

"Gibbs was also fascinated by the question of happiness. As he had grown wealthy through the 1980s and particularly after the Telecom deal, he’d noticed many people assuming that the money must have made him happier. It hadn’t particularly. He’d derived great satisfaction from his achievements in his chosen field — successfully completing big deals — but beyond a certain point more money didn’t equate to greater happiness. For many years he’d been quietly testing some of the fundamental assumptions that underpinned modern social activism: that normal folk wanted the lives of their idols, that the old and infirm wanted to be young again and that the lives of the poor would be transformed if they had more money. When meeting new people, whether at his home in Auckland, in a Moscow taxi, or by the side of the road in Cambodia, Gibbs would ask them three questions."

"Running parallel with that, Gibbs worked with White on some financial engineering to gear the business up a little. Their package, which returned $400 million of capital to shareholders, also gave the share price a jolt. Investment in plant and technology, meantime, remained significant. In the financial year after the reconstruction, Telecom’s investment at $407 million was higher than the $400 million taken by shareholders in dividends.[35](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477273-050103421-35)"

"The first was, ‘If you could be anyone in the world who would it be?’ Early on Gibbs had assumed that people would probably prefer to be soccer stars, Brigitte Bardot, billionaires or someone glamorous. To his surprise, everyone he asked, after a little thought, preferred to remain themselves. He has been equally amazed by the responses to his second question: ‘If you could be any age, what would it be?’ Again, he’d assumed that older people would want to be younger, but very few did. Around 90 per cent of the people he asked were happy where they were and didn’t really want to go back. The third question he found most interesting: ‘What would you do if your aunt died and left you a lot of money?’ Invariably people said they’d pay off mortgages, buy certain things, travel a bit, but virtually no one told him that they’d radically alter their lives if they had access to money. The most dramatic example of this was a young English girl that Gibbs had started talking to in a Hong Kong bar. She’d told him her life story, how she’d been a chorus dancer in London, then had spent a few years working on boats in the Caribbean and was now working her way around the world, and how what she really wanted was to get back on to the stage. When Gibbs asked her what she’d do if her auntie died and left her £200,000, she said she would have a party with her best mates until it was gone. She then laughed and said, ‘Doesn’t that make a fool of what I’ve told you.’ Gibbs observes: *I find it amazing that through our genes nature makes nearly everyone content to be who they are, whatever their age and circumstances.*"

"Then Gibbs pulled out an A4 sheet of paper outlining what should be done, which, in essence, was a second round of restructuring to halve the staff numbers again and blow Clear away by being leaner and meaner."

"From Gibbs’ perspective, the primary task for the new chief executive was to implement the plan that had been drawn together by the taskforce he was leading. Deane had to satisfy himself that it was deliverable, commit to it and then make it happen. This he did with style, taking on McMillen as his chief operating officer and White as his chief financial officer, and bringing in some of his own people to strengthen the marketing and human resources side, where the taskforce’s work was relatively underdeveloped. In February 1993 he announced the second round of restructuring, with a goal of reducing staff numbers to 7500 over four years. It wasn’t Gibbs’ original target, but it was sufficient to ‘make the company sing’.[37](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477273-050103421-37) The market responded with gusto, sending the share price surging past $3.00 almost immediately.[38](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477273-050103421-38) When critics said Gibbs was tough and mean for slashing staffing levels, his reply was always the same: ‘It’s not me that’s tough on Telecom, it’s the consumers; they want and demand cheap calls. If we hope to remain a profitable business we have to give them what they want.’ Telecom’s progress was also helped by the slow progress Clear was making in its court battles."