Word: buyouts
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Dates: during 1980-1989
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...Members of the RJR Nabisco board of directors have described you as an inside raider, because you initiated a leveraged buyout as the company's chief executive. What is your response...
...just to be convivial. Declaring that he had tried everything he could during the past two years to boost RJR Nabisco's stock price, Johnson said he had found a solution: he and his fellow top managers would take complete control of the company in a leveraged buyout (LBO). Johnson would then sell off some of the company's food brands and run the remaining divisions as a private company. Surprised that a chief executive would initiate a raid on his own company, the directors nonetheless allowed him to mount what would be the largest takeover ever...
...University has invested $20 to $40 million as one of 70 participants in a limited partnership managed by the Wall Street firm Kohlberg, Kravis, Roberts, and Co. (KKR), which will make the down payment for the buyout. It is not clear how much Harvard money will actually help finance the takeover...
Experts have said the University may turn a 30 percent profit on its share in the buyout. Harvard also stands to benefit from its ownership of RJR stock, which has nearly doubled in value since the takeover bidding began five weeks...
Johnson, 56, may have grossly miscalculated. When he announced during an Oct. 19 dinner at Atlanta's Waverly hotel that he and seven other managers intended to take the company private in a $17.6 billion leveraged buyout, RJR's board members reacted with shock, one of them now says, "because he was raiding the company from the inside." At first blush, the $75-a-share offer seemed generous, compared with the market price of about $56 at the time. But the directors' shock became outrage when they later learned about the huge piece of the action that Johnson...