Word: manhattans
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Dates: during 1980-1989
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...Shearson Lehman Hutton and Salomon Brothers, raised their bid from $17.6 billion to $21 billion, topping the rival offer of $20.6 billion from Kohlberg Kravis Roberts, the high-flying leveraged-buyout firm. Now the two sides may be getting new competition. At week's end Forstmann Little, a Manhattan investment firm, said it might make an even higher bid for RJR Nabisco, backed by Procter & Gamble and other large corporate investors...
Buyouts have become so attractive that they are sweeping through corporate boardrooms like no other business fad in memory. In the first ten months of 1988, according to IDD Information Services, a Manhattan research firm, 143 companies were taken private in buyouts worth $91 billion, in contrast to 105 deals worth $36 billion during the same period of 1987. These transactions are enriching shareholders and buyout specialists, but the takeovers could be causing grave damage to U.S. industry. Never before has debt been substituted for shareholders' equity on such a huge scale. No one knows how these highly leveraged companies...
...Says James George, manager of Oregon's $9 billion public-employee retirement fund, which has invested $640 million with KKR: "The secret of KKR's success is that it makes an awful lot of money for its partners." Agrees Gus Oliver, a general partner in Coniston Partners, another Manhattan investment firm that specializes in takeovers: "KKR's success reflects the compounding effect. Because of its track record, it can attract all the capital in the world. Because of its capital base, it can do any deal in the world...
Determined not to let the RJR Nabisco deal get away, Kravis demanded that Cohen come by KKR's Manhattan offices. Chewing out Cohen in front of Shearson aides, Kravis demanded a major role in the buyout, sputtering, "This is my franchise!" Cohen walked out, suggesting they talk again in a few days. But before that talk took place, Kravis delivered a thumping counterpunch: a $20.6 billion buyout bid for RJR Nabisco...
Arriving at RJR's Manhattan offices about 1:15 a.m., Roberts flinched at the sight of Cohen puffing away on his ever present cigar and asked sarcastically if RJR, which sells some 290 billion cigarettes a year, also made cigars. Roberts, who moved to a seat across the room, seriously misjudged his audience. The last thing the embattled RJR team wanted to hear at that hour was another antismoking crack, especially from a would-be ally...