OUR HERITAGE: THE STORY OF STARK COUNTY. The Hoover family's namesake company reigned over the vacuum business for decades — until Chicago Pacific.
The kind-hearted Christian gentleman, William H. 'Boss' Hoover, whose statue graces North Canton's Bitzer Park on the town square, founded the business that became known as The Hoover Co.
A son, Herbert W. Hoover, built it into a worldwide corporation, but it was another son, deep-thinker Frank G. Hoover, who turned out to be the prophet of the bunch.
In the early 1950s, when the company employed 15,000 people and dominated the vacuum cleaner market, it was Frank G. Hoover, the recently retired company president, who wrote the book (literally) on the company.
Published in 1955, "Fabulous Dustpan" is a 250-page chronicle of the rise of the North Canton-based business. It's riddled with passages which, when examined today, make Frank G. Hoover look like Nostradamus.
Consider this from the preface: "Corporations are like individuals," he wrote. "They are born, they grow; and unless there is continued transfusion of new ideas to adjust to new times, they die."
Or this one, from the book's 24th and final chapter, titled "Letter to Young Future Managers": "Now if you are selling, and you will be, no matter what you call yourself, you will come to the place where you find that you can make a sale by cutting the price or giving presents," he wrote.
"Do not sell on price or presents."
"Will Hoover tried cutting the price. But he found there was always someone who could cut the price lower. That's why the Boss invented the patented Sensible Irish Horse Collar, which he sold for more instead of less money. He learned that if you excel, you don't have to undersell."
The Hoover Co., of course, no longer exists today.
The reasons for its demise are many and complex. After two decades of ownership transitions, it was enveloped in 2007 by TTI Floor Care North America, which is part of Hong Kong-based TTI. It's now one of many floor-care product brands TTI sells around the world. The business that most everyone in Stark County assumed would be here forever straggled out of the area in bits and pieces. A distribution center in nearby Jackson Township was the last remaining vestige of the — by then, bastardized — business to leave; it closed in January 2016.
"It's sad because it was such a source of pride for North Canton," said 63-year-old Michael E. Hoover, of New York, who has spent his career in finance, investments and international banking.
He never worked at the Hoover Co., but he's a great-grandson of the company's founder.
And Michael Hoover's father, Joseph Hoover, who died in 1996, was the last Hoover family member in a management position in the business. He retired in 1981 as secretary of the company, and he was a member of the board in 1985 when Chicago Pacific Corp. effectively took over The Hoover Co., buying its stock for $535 million.
It was in the midst of Chicago Pacific's takeover bid that a then-32-year-old Michael Hoover and his cousin, 31-year-old John Hoover, came up with an idea. It was crazy or genius, depending upon your point of view. John Hoover had never worked at the Hoover Co., either, but he also was a great-grandson of the "Boss."
Together, the two devised a plan that could have saved the Hoover Co. It was a plan that, had it come to fruition, might have changed the course of history for a business that carried their family name.
"The first time around, the family circled its wagons," said a now-62-year-old John Hoover, who once worked as a managing director for Timken Co. and currently is general counsel for Export Now, an Akron-based firm that helps companies expand their e-commerce businesses into the Chinese market.
He was referring to a first Hoover takeover bid, five years before anyone had heard of Chicago Pacific.
J.B. Fuqua, an Atlanta millionaire who headed Fuqua Industries, had made a habit of buying a diverse bunch of companies through the years. He set his sights on Hoover and offered $22 per share to family members. He planned to follow up by offering Fuqua stock to gain even more Hoover stock, which had been traded publicly since 1943, when an initial stock offer was made to raise funds for expansions.
Herbert W. Hoover Jr., whose father had built the corporation, had been deposed as company president more than a decade earlier. He, reportedly, was prepared to sell his huge share of stock to Fuqua. Other family members and management, however, blocked the deal in federal court. Company officials also exercised a clause that had required Herbert W. Hoover Jr. to first give the company an opportunity to match any such buyout offer, so the Hoover Co. borrowed money to buy the former company president's stock shares for a total of $24 million.
Stockholders were angry. They sued the company, as did some family members. They said Hoover officials should have accepted the generous Fuqua offer. Company officials ultimately agreed to explore avenues for another possible buyer.
An uninvited buyer soon emerged: Chicago Pacific.
It was 1984, the heyday of the "corporate raider" phenomena. That's when an investor buys a gargantuan share of a publicly traded company, then, typically, uses its newly acquired majority voting share to change company management or the direction of the business to make the most money for shareholders.
The bullish stock market that existed in the 1980s created opportunities and made household names out of people like Carl Icahn (Trans World Airlines), T. Boone Pickens (attempt to raid Gulf Oil), Sir James Goldsmith (who targeted Goodyear) and Ronald Perelman (Revlon). Since then, many corporations have instituted strategies, such as "poison pills," golden parachutes for executives and carrying higher debt on balance sheets, to make them far less ripe for takeovers.
Chicago Pacific was basically the remains of the bankrupt former Chicago, Rock Island and Pacific Railroad Co. Lester Crown, whose millionaire industrialist family once counted part-ownership of the New York Yankees among its holdings, made former Arthur Andersen & Co. Chairman Harvey Kapnick the chairman of Chicago Pacific. And in December 1984, a brokerage firm contacted Hoover on behalf of Chicago Pacific to discuss possible acquisition of the vacuum cleaner business.
Two months later, Hoover officials rejected the idea. However, in October 1985, Chicago Pacific returned with an unsolicited offer of $40 per share for all 12.3 million outstanding shares of Hoover stock.
Behind the scenes, Michael and John Hoover, the two 30-something great-grandsons of "Boss" Hoover who had never worked in the family business, had hatched an idea to put the company solely back in family hands.
Although it wasn't publicized at the time, such a possibility existed. In an Oct. 16, 1985, Chicago Tribune story about Chicago Pacific's offer, a financial analyst even noted "it's conceivable that senior Hoover management, directors and the Hoover family could try to take the company private through a leveraged buyout."
The Hoover Co. carried little debt.
"It really would have been an easy thing to do," recalled John Hoover, who was practicing law in Washington, D.C., at the time. "There were 99 or 100 Hoover family stockholders who controlled about 30 percent of the stock."
The idea was to borrow the money needed to buy the non-family stock shares by matching or topping Chicago Pacific's offer. Such a move essentially would have taken the business private again.
"My cousin and I, we made it known that we were ready, willing and able to come back home to North Canton to do that," Michael Hoover said. "There would have been a bidding war, that's for sure."
Eighty-six-year-old Frank Vaughn, who lives in Aurora, was a Hoover senior vice president during Chicago Pacific's overtures. He said he wasn't aware that some Hoover family members had discussed a plan to take the company private, but added it could have been done.
"We were a strong company," Vaughn recalled. "We had something like $1.2 billion in annual revenue. We were coming off our best year ever. We were selling 38 percent of the vacuum cleaner market."
Vaughn went on to become president of Chicago Pacific's appliance group before leaving in 1992.
John Hoover, who had inherited 11,000 shares from his grandmother, said it would have been a huge challenge, if they had made their plan a reality. Still, he envisioned it as an investment in his family and for all the far-flung Hoover relatives, who by the 1980s lived all over the country.
"That name meant a lot; there was a lot of equity in that name," he said.
Michael Hoover agreed.
"But the pressure would have been on," he said. "The pressure to come up with better products and compete with global competition ... and we would have been outsiders to the the whole (business)."
The young Hoovers were rebuffed.
"Basically, the Hoover Co. was too conservative .... they weren't interested in (taking the company private)," Michael Hoover said.
He said he believes company officials and some family members might have believed a "white knight" was on the horizon, beyond Chicago Pacific. In corporate lingo, a white knight is a friendly buyer, usually interested in keeping executives and business plans in place after a purchase of the company.
By late October 1985, Chicago Pacific had upped its offer from $40 a share to $43, for an estimated total of $535 million — an offer the Hoover board of directors then endorsed.
Coming Monday: The Hoover Co. is gone, but the family name remains strong.
Reach Tim at 330-580-8333 or firstname.lastname@example.org.
On Twitter: @tbotosREP