Word: buyouts
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Dates: during 1980-1989
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Cabot said Harvard owns a share in 50 to 60different limited partnerships, about 10 of whichare leveraged buyout partnerships. The remainderis in a variety of investment fields, includingventure capital firms...
...bought the cookies before last week's news that the management of RJR-Nabisco, a publicly-held consumer products conglomerate, had proposed a $17 billion offer to buy stock and take private ownership of the company. It was the largest buyout bid in history...
They need not have worried: the deals are back -- and bigger and bolder than ever. Last week top executives at RJR Nabisco stunned Wall Street by proposing what would be the biggest takeover in U.S. history: a $17.6 billion leveraged buyout by management of the tobacco and food conglomerate. (Among its top brands: Winston cigarettes, Oreo cookies, Ritz crackers and Life Savers candy.) The RJR executives, with the help of the Shearson Lehman Hutton investment firm, hope to borrow close to $16 billion to finance the deal. If the transaction is completed, it would eclipse Chevron's $13.3 billion acquisition...
Very few firms these days are big enough to be safe from takeovers. This year alone, such familiar institutions as Kroger, Polaroid and Bloomingdale's (Federated Department Stores) have come under attack. One reason for the buyout binge is the amount of money available for acquisitions. Private investors have guaranteed more than $30 billion in capital to large takeover funds, providing would-be raiders with the capital to mount their attacks. Kohlberg, Kravis, Roberts, an investment firm with $5.6 billion for use in takeovers, is a leader in the field. Since the takeover funds can borrow against their capital, they...
Risks arise, though, when takeovers force a company to assume excessive debt. The proposed buyout of RJR Nabisco, for example, could load the company with enough debt to make it vulnerable to rising interest rates and a recession. Since Philip Morris will borrow about $9 billion to buy Kraft, its obligations too could become uncomfortable. The tobacco conglomerate is confident, however, that its cigarette business will generate enough cash to pay off its debts...