Word: kkr
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Board members first showed their unhappiness in October when Johnson and KKR began publicly brawling over a possible joint bid. Angered by the spectacle, the directors called for outside offers. KKR, headed by Kravis and his cousin George Roberts, 45, made its own bid, and so did a team composed of the First Boston investment firm and Chicago's billionaire Pritzker family. The Pritzkers topped the first round of bidding with a preliminary offer of $27 billion, or about $118 a share for RJR stock that had traded for just $56 on the eve of the battle. The Johnson group...
...KKR's seeming weakness turned out to be a trap. The company's officers even let it be known that Kravis was heading to Vail, Colo., for a skiing weekend and that Roberts was flying back to his home in San Francisco. But Kravis and Roberts stayed in close touch with their team in New York City as it prepared the final attack. When the directors met last week on the 35th floor of a midtown Manhattan skyscraper to open the final bids, they found that Kravis and Roberts had pumped their offer up to $106 a share, while...
Persuaded that KKR was the winner, directors summoned Kravis to a conference room at about 9 p.m. to complete the deal. The real brawl, however, was just beginning. "This game is not played by Marquis of Queensberry rules," said a Johnson adviser. "There really are no rules for this kind of auction...
...Nabisco offices a few blocks away, Johnson was furious when he learned that the board was ready to sell the company to KKR. His legal advisers swiftly drafted a letter to RJR chairman Charles Hugel, who heads the board but holds no managerial post in the company, declaring they were "astounded" that the directors "would go off into the middle of the night to negotiate." Hugel explained that the KKR bid simply was much higher. By 2 a.m., however, Johnson's advisers persuaded him that his chances were still alive. Armed with a new bid for $108 a share, Johnson...
...gave Johnson and his small coterie of advisers 15 minutes to sweeten the latest offer. At about 1:15 p.m. on Nov. 30, Johnson, chain smoking, submitted a bid of $112 a share and then settled into a tiny % office to await the verdict. The directors still favored Kravis. "KKR was going to have to sell fewer businesses," a source close to the board said, "and there was more protection for RJR employees under the KKR offer." Moreover, the informant added, while the Johnson group said it would reduce its initial stake in RJR after the takeover from...