|Industry|| Food processing |
|Fate||Separated R. J. Reynolds Tobacco Company and renamed to Nabisco Group Holdings|
|Founded||April 25, 1986|
|Headquarters|| Winston-Salem, North Carolina |
Cobb County, Georgia
Midtown Manhattan, New York City
|Parent||RJR Nabisco Holdings Corp. (1985-1999)|
RJR Nabisco, Inc., was an American conglomerate, selling tobacco and food products, headquartered in the Calyon Building in Midtown Manhattan, New York City.RJR Nabisco stopped operating as a single entity in 1999; however, both RJR (as R. J. Reynolds Tobacco Company) and Nabisco (now part of Mondelēz International) still exist.
The United States of America (USA), commonly known as the United States or simply America, is a country comprising 50 states, a federal district, five major self-governing territories, and various possessions. At 3.8 million square miles, it is the world's third or fourth largest country by total area and is slightly smaller than the entire continent of Europe. Most of the country is located in central North America between Canada and Mexico. With an estimated population of over 327 million people, the U.S. is the third most populous country. The capital is Washington, D.C., and the most populous city is New York City.
A conglomerate is a combination of multiple business entities operating in entirely different industries under one corporate group, usually involving a parent company and many subsidiaries. Often, a conglomerate is a multi-industry company. Conglomerates are often large and multinational.
Tobacco is the agricultural product of the leaves of plants in the genus Nicotiana. All species of Nicotiana contain the addictive drug nicotine—a stimulant and sedative contained in all parts of the plants except the seeds—which occurs in varying amounts depending on the species and variety cultivated. See types of tobacco and curing of tobacco for more information.
RJR Nabisco was formed in 1985 by the merger of Nabisco Brands and R.J. Reynolds Tobacco Company.In 1988 RJR Nabisco was purchased by Kohlberg Kravis Roberts & Co. in what was at the time the largest leveraged buyout in history. In 1999, due to concerns about tobacco lawsuit liabilities, the tobacco business was spun off into a separate company, and RJR Nabisco was renamed Nabisco Holdings Corporation. Nabisco is currently owned by Mondelēz International Inc.
Nabisco is an American manufacturer of cookies and snacks headquartered in East Hanover, New Jersey. The company is a subsidiary of Illinois-based Mondelēz International. Nabisco's plant in Chicago, a 1,800,000-square-foot (170,000 m2) production facility at 7300 S. Kedzie Avenue, is the largest bakery in the world, employing more than 1,200 workers and producing around 320 million pounds of snack foods annually.
A leveraged buyout (LBO) is a financial transaction in which a company is purchased with a combination of equity and debt, such that the company's cash flow is the collateral used to secure and repay the borrowed money. The use of debt, which normally has a lower cost of capital than equity, serves to reduce the overall cost of financing the acquisition. The cost of debt is lower because interest payments often reduce corporate income tax liability, whereas dividend payments normally do not. This reduced cost of financing allows greater gains to accrue to the equity, and, as a result, the debt serves as a lever to increase the returns to the equity.
RJR Nabisco Holdings Corp. (NYSE: NGH) was the parent company of RJR Nabisco, Inc.After the food and tobacco businesses separated in June 1999, Nabisco Group Holdings Corp. owned 80% of RJR Nabisco Holdings Corp., which was the parent company of Nabisco, Inc.
R. J. Reynolds Tobacco Company was founded in Winston-Salem, North Carolina in 1875 and changed its name to R. J. Reynolds Industries, Inc. in 1970. It became RJR Nabisco on April 25, 1986 after the company's $4.9 billion purchase, and earlier 1.9 billion stock swap, of Nabisco Brands Inc. in 1985.
The R. J. Reynolds Tobacco Company (RJR), based in Winston-Salem, North Carolina and founded by R. J. Reynolds in 1875, is the second-largest tobacco company in the U.S.. RJR is a wholly owned subsidiary of Reynolds American Inc., which, in turn, is owned by British American Tobacco of the United Kingdom.
Winston-Salem is a city in and the county seat of Forsyth County, North Carolina, United States. With a 2018 estimated population of 246,328 it is the second largest municipality in the Piedmont Triad region, the fifth most populous city in North Carolina, the third largest urban area in North Carolina, and the eighty-ninth most populous city in the United States. With a metropolitan population of 676,673 it is the fourth largest metropolitan area in North Carolina. Winston-Salem is home to the tallest office building in the region, 100 North Main Street, formerly the Wachovia Building and now known locally as the Wells Fargo Center.
In corporate finance a stock swap is the exchange of one equity-based asset for another, where, during the merger or acquisition, the swap provides an opportunity to pay with stock rather than with cash.
In August 1986, the RJR Nabisco board announced that F. Ross Johnson would replace J. Tylee Wilson as head of the company effective January 1, 1987. Soon after that, Johnson, believing "bucolic" Winston-Salem did not have the right image for a "world-class company", began looking at other possible headquarters cities. After ruling out New York City and Dallas, the company decided on Atlanta because it was "nouveau riche and overbuilt".On January 15, 1987, the RJR Nabisco board approved a headquarters move from Winston-Salem to Cobb County, Georgia, north of Atlanta, where the company had rented space. The move would affect 250 to 300 employees, while Winston-Salem would still have 14,000 people working for the company. RJR Nabisco donated the 519,000-square-foot World Headquarters Building to Wake Forest University but continued to use it until the September 1987 move. Later, RJR Nabisco's Planters-Life Savers Division moved to the former headquarters building.
Frederick Ross Johnson, OC was a Canadian businessman, best known as the chief executive officer of RJR Nabisco in the 1980s.
The City of New York, usually referred to as either New York City (NYC) or simply New York (NY), is the most populous city in the United States. With an estimated 2018 population of 8,398,748 distributed over a land area of about 302.6 square miles (784 km2), New York is also the most densely populated major city in the United States. Located at the southern tip of the state of New York, the city is the center of the New York metropolitan area, the largest metropolitan area in the world by urban landmass and one of the world's most populous megacities, with an estimated 19,979,477 people in its 2018 Metropolitan Statistical Area and 22,679,948 residents in its Combined Statistical Area. A global power city, New York City has been described as the cultural, financial, and media capital of the world, and exerts a significant impact upon commerce, entertainment, research, technology, education, politics, tourism, art, fashion, and sports. The city's fast pace has inspired the term New York minute. Home to the headquarters of the United Nations, New York is an important center for international diplomacy.
Dallas is a city in the U.S. state of Texas and the seat of Dallas County, with portions extending into Collin, Denton, Kaufman and Rockwall counties. With an estimated 2018 population of 1,345,047, it is the ninth most-populous city in the U.S. and third in Texas after Houston and San Antonio. Located in North Texas, the city of Dallas is the main core of the largest metropolitan area in the Southern United States and the largest inland metropolitan area in the U.S. that lacks any navigable link to the sea. It is the most populous city in the Dallas–Fort Worth metroplex, the fourth-largest metropolitan area in the country at 7.5 million people as of 2018. The city's combined statistical area is the seventh-largest in the U.S. as of 2017, with 7,846,293 residents.
The RJR Nabisco leveraged buyout was, at the time, widely considered to be the preeminent example of corporate and executive greed. Bryan Burrough and John Helyar published Barbarians at the Gate: The Fall of RJR Nabisco , a successful book about the events which was later turned into a television movie for HBO.
Bryan Burrough is an American author and correspondent for Vanity Fair. He has written six books. Burrough was a reporter for The Wall Street Journal in Dallas, Texas, between 1983 and 1992. He has written for Vanity Fair since 1992. While a Wall Street Journal reporter, he won the Gerard Loeb Award for excellence in financial journalism three times. Burrough has written a number of book reviews and OpEd articles for publications such as The New York Times, Los Angeles Times, and The Washington Post. He has also made appearances on "Today", "Good Morning America", and many documentaries.
John Helyar is an American former journalist who has worked for The Wall Street Journal, Fortune magazine, ESPN.com, ESPN The Magazine and Bloomberg News. He currently works as a research analyst at Select Equity Group.
Barbarians at the Gate: The Fall of RJR Nabisco is a book about the leveraged buyout (LBO) of RJR Nabisco, written by investigative journalists Bryan Burrough and John Helyar. The book is based upon a series of articles written by the authors for The Wall Street Journal. The book was later made into a made-for-TV movie by HBO, also called Barbarians at the Gate. The book centers on F. Ross Johnson, the CEO of RJR Nabisco, who planned to buy out the rest of the Nabisco shareholders.
Ross Johnson was the President and CEO of RJR Nabisco at the time of the leveraged buyout and Henry Kravis was the managing partner at Kohlberg Kravis Roberts & Co. The leveraged buyout was in the amount of $25 billion, and the battle for control took place between October and November 1988.
Although KKR eventually took control of RJR Nabisco, RJR management and Shearson Lehman Hutton had originally announced that they would take RJR Nabisco private at $75 per share. A fierce series of negotiations and proposals ensued which involved nearly all of the major private equity players of the day, including Morgan Stanley, Goldman Sachs, Salomon Brothers, First Boston, Wasserstein Perella & Co., Forstmann Little, Shearson Lehman Hutton, and Merrill Lynch. Once put in play by Shearson Lehman Hutton and RJR management, almost every major Wall Street firm involved in M&A launched frenzied, literal last-minute bids in a fog of incomplete or misleading information.
KKR quickly introduced a tender offer to obtain RJR Nabisco for $90 per share—a price that enabled it to proceed without the approval of RJR Nabisco's management. RJR's management team, working with Shearson Lehman Hutton and Salomon Brothers, submitted a bid of $112, a figure they felt certain would enable it to outflank any response by Kravis. KKR's final bid of $109, while a lower dollar figure, was ultimately accepted by the board of directors. It was accepted because KKR's offer was guaranteed whereas management's lacked a "reset", meaning that the final share price might have been lower than their professed $112 per share. Additionally, many in RJR's board of directors had grown concerned at recent disclosures of Johnson's unprecedented golden parachute deal. Time Magazine featured Johnson on the cover of its December 1988 issue along with the headline "A Game of Greed: This man could pocket $100 million from the largest corporate takeover in history. Has the buyout craze gone too far?".
KKR's offer was welcomed by the board, and, to some observers, it appeared that their elevation of the reset issue as a deal-breaker in KKR's favor was little more than an excuse to reject Johnson's higher payout of $112 per share.Johnson received compensation worth more than $60 million from the buyout, then left in February 1989. In March 1989, Louis V. Gerstner of American Express became the new head of RJR Nabisco.
On April 27, 1989, RJR Nabisco announced it would move its headquarters to the New York City area.
As a result of the acquisition, RJR Nabisco divested the following divisions:
On March 21, 1991, RJR Nabisco Holdings Corp. became a publicly traded stock. In March 1999, RJR Nabisco announced the sale of the international division of R. J. Reynolds Tobacco, and in June of that year, the company sold the remainder of R. J. Reynolds Tobacco to stockholders. The parent company became Nabisco Group Holdings and owned 80.5 percent of Nabisco Holdings. In 2000, Philip Morris bought Nabisco Holdings. Soon after that, R. J. Reynolds Tobacco Holdings, Inc., first traded in June 1999, announced the acquisition of Nabisco Group Holdings. The deal was completed in December 2000.
In April 1988, RJR Nabisco fired the Saatchi & Saatchi advertising agency for their commercial for Northwest Airlines with the pitch that they no longer allow smoking in any of their flights. Saatchi and Saatchi was handling advertising for Nabisco products and not for any RJR tobacco products.
Private equity (PE) typically refers to investment funds, generally organized as limited partnerships, that buy and restructure companies that are not publicly traded.
Premier was an American brand of smokeless cigarettes which was owned and manufactured by the R.J. Reynolds Tobacco Company.
KKR & Co. Inc. is an American global investment firm that manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate, credit, and, through its strategic partners, hedge funds. The firm has completed more than 280 private equity investments in portfolio companies with approximately $545 billion of total enterprise value as of June 30, 2017. As of September 30, 2017, Assets Under Management (“AUM”) and Fee Paying Assets Under Management (“FPAUM”) were $153 billion and $114 billion, respectively.
Henry R. Kravis is an American businessman, investor, and philanthropist. He is the co-founder of Kohlberg Kravis Roberts & Co., a global investment firm with a market cap of approximately $24.7 billion as of November 2019. He has an estimated net worth of $5.8 billion as of July 2018, ranked by Forbes as the 365th richest person in the world.
George R. Roberts is an American billionaire financier. He is one of the three original partners of Kohlberg Kravis Roberts, which he co-founded alongside Jerome Kohlberg and first cousin Henry Kravis in 1976.
Forstmann, Little & Company was a private equity firm, specializing in leveraged buyouts (LBOs). At its peak in the late 1990s, Forstmann Little was among the largest private equity firms globally. Ultimately, the firm would suffer from the bursting of the internet and telecom bubbles, having invested heavily in technology and telecommunications companies. Following the death of the last surviving founder, Theodore Forstmann, in 2011, the firm was dissolved and its assets sold off. It closed in May 2014.
Barbarians at the Gate is a 1993 television movie based upon the book by Bryan Burrough and John Helyar, about the leveraged buyout (LBO) of RJR Nabisco.
Jerome Kohlberg Jr. was an American businessman, investor, and philanthropist. He was an early pioneer in the private equity and leveraged buyout industries founding private equity firm Kohlberg Kravis Roberts & Co. and later Kohlberg & Company.
Del Monte Foods, Inc is a North American food production and distribution company headquartered at 3003 Oak Road, Walnut Creek, California, USA. Del Monte Foods is one of the country's largest producers, distributors and marketers of branded processed food for the U.S. retail market, generating approximately $1.8 billion of annual sales. Its portfolio of brands includes Del Monte, S&W, Contadina, College Inn, Fruit Burst, Fruit Naturals, Orchard Select and SunFresh. Gregory Longstreet is the current Chief Executive Officer of the Del Monte Foods. Several Del Monte products hold the number one or two market share position. The company also produces, distributes and markets private-label food.
The history of private equity and venture capital and the development of these asset classes has occurred through a series of boom and bust cycles since the middle of the 20th century. Within the broader private equity industry, two distinct sub-industries, leveraged buyouts and venture capital experienced growth along parallel, although interrelated tracks.
Private equity in the 1980s relates to one of the major periods in the history of private equity and venture capital. Within the broader private equity industry, two distinct sub-industries, leveraged buyouts and venture capital experienced growth along parallel although interrelated tracks.
Shearson was the name of a series of investment banking and retail brokerage firms from 1902 until 1994, named for Edward Shearson and the firm he founded, Shearson Hammill & Co. Among Shearson's most notable incarnations were Shearson / American Express, Shearson Lehman / American Express, Shearson Lehman Brothers, Shearson Lehman Hutton and finally Smith Barney Shearson.
Peter A. Cohen is the chairman and CEO of Cowen Inc., formerly known as Cowen & Company. Prior to his current role, Cohen founded Ramius Capital Management in 1994, which merged with Cowen Inc in 2009. Prior to this, Cohen was the chairman and chief executive officer of Shearson Lehman Brothers, later known as Shearson Lehman Hutton from 1983 through 1990.
Eric Gleacher is an American investor and financier, and the founder and chairman of Gleacher & Company, an independent investment banking firm based in New York City.
Chun King was an American line of canned Chinese food products founded in the 1940s by Jeno Paulucci, who also developed Jeno's Pizza Rolls and frozen pizza, and the Michelina's brand of frozen food products, among many others. By 1962, Chun King was bringing in $30 million in annual revenue and accounted for half of all U.S. sales of prepared Chinese food. Chun King was sold to the R. J. Reynolds Tobacco Company, in 1966 for $63 million.