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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.
The leveraged buyout was in the amount of $25 billion (plus assumed debt), and the battle for control took place in October and November 1988. KKR would eventually prevail in acquiring RJR Nabisco at $109 per share marking a dramatic increase from the original announcement that Shearson Lehman Hutton would take RJR Nabisco private at $75 per share.
Barbarians at the Gate: The Fall of RJR Nabisco is a 1989 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. [1]
Under Kravis and Roberts the firm was responsible for the 1988 leveraged buyout of RJR Nabisco. At a cost of $31.4 billion, [ 14 ] it was then the highest price ever paid for a commercial enterprise. The publicity surrounding the event led to the story being dramatized in the book and film, Barbarians at the Gate . [ 15 ]
The buyout of RJR Nabisco was completed in April 1989 and KKR would spend the early 1990s repaying the RJR's enormous debt load through a series of asset sales and restructuring transactions. [ 57 ] [ 58 ] [ 59 ] KKR did not complete a single investment in 1990, the first such year since 1982.
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The event was chronicled in the book, Barbarians at the Gate: The Fall of RJR Nabisco, and later made into a television movie starring James Garner. F. Ross Johnson was the President and CEO of RJR Nabisco at the time of the leveraged buyout and Henry Kravis was a general partner at KKR. The leveraged buyout was in the amount of $25 billion ...
At $31.1 billion of transaction value, RJR Nabisco was the largest leveraged buyout in history until the 2007 buyout of TXU Energy by KKR and Texas Pacific Group. [19] In 2006 and 2007, a number of leveraged buyout transactions were completed that for the first time surpassed the RJR Nabisco leveraged buyout in terms of nominal purchase price.