Word: nabisco
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Dates: during 1980-1989
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...investors who owned a company's top-quality bonds when the same firm's junk bonds hit the market. Since the new IOUs would saddle the company with a riskier load of debt, the old bonds get clobbered. No sooner had Johnson disclosed that he wanted to buy RJR Nabisco, for example, than the company's $5 billion of outstanding bonds lost 20% of their value. Furious bondholders, including Metropolitan Life and ITT, immediately sued for damages. Declared Metropolitan Life chairman Creedon: "No one in his right mind wants to invest in corporate bonds anymore." In fact, the LBO binge...
...than executives make when they break up a company and then put it back on the market. LBO critics argue that managers who fatten their wallets in this way are really profiting at the expense of other stockholders. So far, shareholders have brought eleven class-action suits against RJR Nabisco charging executives with acts ranging from "unfair self-dealing" to "not acting in the best interests of the stockholders...
...fight for RJR Nabisco, that seems to have happened in spectacular fashion. No matter how the battle turns out, the unseemly scramble for riches has, for the moment at least, given overreaching a bad name. In the end, the RJR brouhaha may turn out to be a useful testing of the limits: of greed, of debt, of dealmaking. The resulting outcry may prove an effective regulating device. "In its own way, the deal has been typically American, where nothing is in moderation, including the enormous selfishness of management," notes James Bere, chairman of Borg-Warner. "It's touched a nerve...
...exclusive interview with chief executive officer of RJR Nabisco, Ross Johnson, accompanies the main story. Senior correspondent Frederick Ungeheuer and his wife were about to sit down to Thanksgiving dinner with 20 friends in Roxbury, Conn., when he received word that Johnson, who has refused all public comment since launching his takeover bid in mid-October, was ready to talk. Ungeheuer left immediately for Jupiter, Fla., where Johnson was spending a holiday away from the fray, for a one-hour talk about the megadeal. Ungeheuer has met other big dealmakers in his 25 years of covering business for TIME...
ROSS JOHNSON. A native of Canada, the RJR Nabisco president, 56, has always risen to the top. In 1985, as head of Nabisco Brands, he advocated the merger between that company and RJR Reynolds. Just three years later, as head of RJR, Johnson apparently changed his mind. In October he and a group of top managers offered shareholders $17.6 billion to take the company private, a price they later increased to $22.7 billion...