Word: rjr
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Dates: during 1980-1989
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Much of Wall Street and corporate America saw the board's choice of KKR as a repudiation of Johnson, who had become a symbol of executive greed after first proposing to buy out RJR (1987 sales: $15.8 billion) for $75 a share. Company directors were outraged when they read accounts, leaked by insiders, of how much Johnson and his seven colleagues planned to rake in from the deal: as much as $2.6 billion. Though Johnson later insisted he had planned to share the potential gains with 15,000 RJR employees, the battle lines were clearly drawn -- not just between Johnson...
...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 boosted its offer to $100 a share while KKR bid $94, a price that seemed to indicate that the firm might drop out. The RJR board then extended the contest until...
...RJR 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, 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 8.5% to 4%, "they were still trying to steal the company...
Accepting defeat, Johnson issued a concession. Said he: "I am proud of the fact that we put the best bid on the table the first time and this time." He then returned with an attorney to RJR's 48th-floor New York offices in seemingly good spirits. As city lights glittered around them, the two men sipped drinks and munched Oreo cookies while reflecting on the day's ordeal...