Rupert − already making use of what has since become known as a ‘corporate intelligence service’ − was kept in the picture. He struck at once. His partner Dirk Hertzog was dispatched to London to make Sydney Rothman a take-it-or-leave-it offer: according to Rupert’s calculation Rothmans’ break-up value was £750 000, without goodwill. That was what he was willing to pay, not a penny more. Rupert knew Rothman well. He was not a man for snap decisions. If he tried to prevaricate, he told Hertzog, go to the Continent for a while and give Rothman time to think it over.
It turned out exactly like that. On Hertzog’s return to London Sydney Rothman accepted the proffered £750 000 (R1,5 million). In one fell swoop Rembrandt acquired a concern that had been in business in England since the previous century, when Louis Rothman had opened his kiosk in Fleet Street. There was just one snag: they were short of some £700 000.
On the evening of Wednesday 18 November 1953 Rupert met AD (Lens) Wassenaar, general manager of the insurance company Sanlam, in the old Carlton Hotel in Johannesburg. He asked Wassenaar if Sanlam could help with a loan: he needed £750 000 to close the transaction, and at once. It had been the managing director of the Sanlam Group, Dr Louw, who had taken receipt of Rembrandt’s first cigarette at the Paarl factory five years previously.
Monday 25 November 1953 was the day on which Rembrandt had to pay for the takeover, which left only four days to find the money. Back in Cape Town on the day following his meeting with Rupert, Wassenaar convened a special meeting of Sanlam’s board for the Friday. The matter was so urgent that a car was sent to Riebeek West on Friday morning to collect FS Malan, one of Sanlam’s directors.3
In Cape Town that Friday Rupert put his case, the first time in Sanlam’s history that an outsider was permitted to address a board meeting. Using all his powers of persuasion, he managed to secure convertible debentures to the amount of £500 000. Sanlam advanced half of the amount, with its subsidiary African Homes Trust (later Homes Trust, eventually Metlife) and Bonuskor and FVB, both of which were founded by Sanlam, lending the other half. Volkskas bank would provide the remaining quarter of a million.
Monday noon was when the money was due in London. Rupert spent the morning with Jan Hurter, general manager (later managing director) of Volkskas, in the latter’s office in Pretoria as they waited for final confirmation that the money had been transferred. Their acquaintance dated back to the days when TIB rented offices in the Volkskas building in Johannesburg. Both were tense, as they knew what was at stake. At quarter past eleven there was still no telex or telegram from Sanlam. At half past eleven Hurter picked up the phone. ‘Anton, I’m going to telex London to tell them the money is there,’ he said. Rupert would not allow him to do this. He knew that Volkskas, not a big bank at that stage, could be ruined if the transaction should go awry. He reminded Hurter that they had come a long way together, knowing each other since 1941: ‘I’m not going to allow you to risk your whole future to help me and to help Rembrandt today.’ The minutes ticked by. At ten minutes to twelve the message of confirmation came through at last. At noon the money was in London.
Sanlam could congratulate itself: ‘In this way Sanlam helped a South African company take its first step towards becoming a global company.’
Commenting on this closest of close shaves, Rupert observed philosophically, ‘If you knew beforehand what’s in store for you, you’d never start anything.’ When he was asked years later if he ever takes part in Lotto, the officially sanctioned game of chance played by millions of hopeful South Africans every week, he answered with a smile: ‘No, I’ve taken enough big risks in my life!’
In effecting loans with which he financed his expanding business empire, he started following a practice that would yield great dividends in the long run. When money was needed for expansion or whatever, he usually borrowed more than he needed – and then made sure that the debt was redeemed before the due date. That was how Rembrandt established an enviable reputation for creditworthiness over the years.
The Rothmans deal entailed a whirl of overseas activity, including the sale of its 29 tobacco shops. At this point Rupert’s youngest brother Koos, a law lecturer at the University of the Orange Free State, joined the group. His first task was to see to the finalisation of contracts. Stationed first in London and later in New York, he became Rembrandt’s first overseas representative. Under his guidance 27 of Rothmans’ tobacconists were sold – only the shops in Pall Mall and the Burlington Arcade were retained.
Rupert is adamant that his two brothers have been among his most loyal and hardworking supporters. He counts among their virtues that ‘they were not ashamed to put a carton of cigarettes on their shoulders to go and sell it’. They also read through all the contracts and financial statements with him before they were printed.
Commitment and loyalty were indeed the kind of distinguishing characteristics that had laid the foundation for the trek abroad, which heralded a new phase for Rembrandt and Rupert. Soon he would spend one day out of every five on aeroplanes, as his son Johann would also do later.
Chapter 9
International passport
The purchase of Rothmans in 1954 launched Rupert internationally. At the age of 37 he found himself on a playing field where he faced the toughest opposition in the world.
Unlike many other successful South African business people he did not build his fortune on the base of the abundance of the country’s precious metals, raw materials and natural resources as he moved overseas. For this reason Bertie Levenstein, chairman of Rand Tobacco, regards Rupert as the most brilliant entrepreneur to have come out of South Africa. Despite the fact that he could not lay claim to any built-in advantage, the Rembrandt Group started excelling internationally as the only successful post-war cigarette company in the world. Peter Drucker, whom Rupert himself considers the best writer on business he has encountered, refers to this in his book Innovation and entrepreneurship.1 Rupert was driven by the firm conviction that ‘he who doesn’t believe in miracles, is not a realist’ – a motto based on the fund-raising appeal of a Jewish aid organisation he had read about in an American magazine in the 1950s.
At home his overseas ambitions were frowned upon by Sanlam, his biggest creditor. Sanlam was not keen that Rembrandt should have overseas interests; the Rothmans brands on the local market were considered sufficient. Apart from his lack of enthusiasm about overseas industrial involvement, Dr Tienie Louw of Sanlam was also dubious about the future of the British economy. Sanlam therefore requested Rupert to sell his assets in England and come home.
Rupert found this ‘hard to accept’ – he knew that unless his group operated worldwide, international competitors would swallow up his South African interests. But he agreed, and in January 1954 he and Huberte flew to London in one of the world’s first jet-propelled passenger planes, a BOAC Comet 1. On its next flight a few days later the plane crashed over the Mediterranean, killing allon board. The accident was caused by metal fatigue. After it happened twice more to Rupert that a plane in which he had travelled crashed on its next trip, he and his wife made it their policy never to fly together if they could help it.
In London he sought an interview with Sir Edward Baron, head of Carreras, the old, established British company that had wanted to buy Rothmans. The founder, Jose Joaquim Carreras, had opened a tobacconist in London in 1843 and later manufactured Craven A cigarettes. Rupert offered Baron the opportunity to market the Rothmans brands Rembrandt had bought: ‘I know that you wanted them, you negotiated for them and you are going to need them.’ Sitting in his splendid office, Baron heard Rupert out. He turned him down flat: ‘I don’t need you, Mr Rupert. I’ve got Dunhill.’ When Rupert predicted the demise of the brand within a year, the British businessman became so annoyed that ‘he more or less threw me out of his office’, Rupert relates.
From London he proceeded to Hamburg to try to arrange a similar deal with Wolfgang Ritter, head of the German tobacco group Martin Brinkmann AG. They talked amiably over drinks at Ritter’s home on Lake Bremen till three in the morning, but the German, too,