Question

What is the basic story of the RJR-Nabisco story?

Answer 1

Following are the highlights of the most expensive takeover battle in history waged for RJR Nabisco, the food and tobacco giant that is the nation's 19th-largest industrial concern. Oct. 20, 1988: An investment group led by F. Ross Johnson, Nabisco's chief executive, in partnership with the Wall Street firm Shearson Lehman Hutton, proposes a $17 billion leveraged buyout at $75 a share. Oct. 24: Kohlberg, Kravis, Roberts & Company, Wall Street's leader in leveraged buyouts, tops the record bid with a $20.43 billion offer. Oct. 25: Shearson and Kohlberg, Kravis consider a combined bid. Oct. 26: Competition heats up as a joint deal is rejected. Oct. 27: Salomon Brothers joins Shearson as a backer in the management-led offer. Kolhberg, Kravis begins its tender offer for $90 a share. Oct. 28: RJR Nabisco agrees to give Kolberg, Kravis confidential financial data about its operations. Nov. 1: RJR's chairman, Charles E. Hugel, said it is highly likely that the company will be sold. Stock rises $1.25, to $85 a share. Several Kohlberg, Kravis investors balk at allowing the firm to use their cash in a RJR Nabisco buyout because of a possible hostile takeover and because of RJR Nabisco's ties to South Africa. Nov. 2: The two suitors tentatively agree to join forces. Nov. 3: The agreement fails; Mr. Johnson's group raises the stakes with a $92-a-share counteroffer of $20.9 billion. Nov. 4: Forstmann Little indicates it might join the battle with a higher bid. Shearson accuses Forstmann of breach of promise. Nov. 8: RJR Nabisco discloses formal rules for its sale, indicates it might sell its food divisions on its own and sets Nov. 18 as a deadline for bids. Nov. 11: Kohlberg, Kravis extends its tender offer by 10 days, to Dec. 5. Nov. 16: Field narrows as Forstmann Little declines to enter the auction; RJR Nabisco's stock tumbles $4.50, to $84. ITT, which holds RJR Nabisco bonds, sues RJR Nabisco and Mr. Johnson over the decline in the bonds' value. Nov. 18: RJR Nabisco management and Kohlberg, Kravis deliver bids before the 5 P.M. deadline of $22.7 billion and $21.3 billion, respectively. A surprise tentative offer of $23.8 billion to $26.8 billion comes from group led by First Boston, which is aligned with the Pritzker family of Chicago. Financing for that offer is uncertain. Nov. 19: Potential buyers spend the day explaining their complex bids to the company. Nov. 20: Special committee running the auction announces a new deadline, Nov. 29., for reformulated proposals. Nov. 29: Three suitors submit final bids of more than $100 a share. Management offers $22.9 billion, Kohlberg, Kravis offers $24 billion and First Boston offers $23.38 to $26.11. Stock price jumps $1.875, to $90.875. Nov. 30: Kohlberg, Kravis claims victory for the staggering price of $24.88 billion, or $109 a share.