The one that got away

How many times are you going to rewind that moment? What you said. What they said. What you could have said. Maybe if you could just talk it out with someone who would understand, someone else who has lost, and lost big time.

Maybe the retailer who lost The Bay or the adman who lost Sharon Stone. The politician whose defeat sank a political party or the investor who could have owned Canada’s largest tech company. What would they say about loss and the lessons they’ve learned?

You might be surprised.

This was the day you lost. The promotion. The client. The job. Maybe everything you’ve worked for – for how many years? Gone. Maybe you sucked it up and didn’t betray how you felt when you saw it go, in slow motion, in that crystalline instant you knew.

Today philanthropist Joseph Segal is chair of the investment firm Kingswood Capital Corp., Member of the Order of Canada and Chancellor Emeritus at SFU. But in 1979 he was just Joe, a discount retailer entering the big time.

Quotes: Mining the silver lining

Segal was flying into Winnipeg to buy Hudson’s Bay Co., but he had a problem. He’d taken over Zellers Inc. three years before and had turned the company from a near-bankrupt $300-million loser to an $800-million success; the Bay shared the same kind of problems as Zellers had, and Segal was sure he knew how to turn around HBC too.

The problem wasn’t money. Segal had been buying HBC stock secretly through a Montreal broker for the past few years and now owned virtually all outstanding shares, about a million of them. He’d arranged a meeting with the chair of the Bank of Montreal for a $400-million loan to complete the deal for majority ownership. The chair had said, “Joe, you’ll need $500 million” – and he’d given it to him.

No, the problem was that Segal’s wife, Rosalie, didn’t want to move to Toronto. (While HBC heralded Winnipeg as the “traditional” headquarters, the company was managed nationally from Toronto.) Up to that point, Rosalie had been at his side in all the major business events of his life, including when he managed to secure Zellers in a New York

As it turned out, it wasn’t the francophones, it was the anglophones – the Eastern establishment, the people from the best schools with the best manners – who ran the Zellers head office and who shut him out of their society. Segal didn’t really care – he had a company to turn around. But it was hard on Rosalie. She always had social flair and was a natural-born hostess, and three years splitting time between Vancouver and a hotel in Montreal – disconnected from friends and family, long days alone and eating in restaurants – had been a lot to ask.

Segal, on the other hand, saw the Bay as “a great opportunity” financially. Not only that, it was Canada’s most prestigious retailer – “the oldest continuous capitalist corporation in the world,” according to Peter C. Newman. HBC’s warehoused ship logs, journals, ledgers and diaries – 68 tonnes of archives – reached back more than three centuries. Taking charge of Hudson’s Bay Co. wasn’t bad for a boy from Vegreville, Alberta, who, at 14, began peddling frozen fish door-to-door to help the family after his father died.

Now in the Bay’s Winnipeg offices with his lawyer and senior company executives, including the Bay’s governor (other companies have CEOs; HBC has governors), Segal was faced with his choice – lose the deal or lose the next few years with Rosalie. When the governor asked him, “Why don’t we take you over?” Segal seized the opportunity and let the prize go. “I don’t care who takes over whom,” he said. “I just want to see these companies come together.”

John Buchan, the governor general of Canada in the 1930s, said the Bay was “a kind of kingdom” that needed a statesman to run it. Segal knew he was just the man to do it – the only Canadian with the finances and retail know-how. Now he had given up the chance. He would never be The Man Who Bought the Bay. Still, he knew he was right. He tried to explain – to the Bay’s executives, to the governor – that it would cost them more if they waited, but they bought only 50.1 per cent, the barest majority of Zellers stock, at $12 a share. Less than a year later, they would pay $19 a share for the balance – a mistake that earned Segal millions more.

It was the only time Rosalie Segal ever asked her husband not to buy a company. Segal lost the Bay – but profitably. His lesson: life with Rosalie was worth more than the “kingdom.”

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