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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.
He used the money to open his own investment firm, RJM Group, Inc. [9] In 1999 RJR Nabisco spun off R. J. Reynolds Tobacco, which began trading on June 15 as R. J. Reynolds Tobacco Holdings, Inc., and a year later announced it would buy Nabisco Group Holdings Inc., the company that had been RJR Nabisco. This followed the sale of Nabisco ...
One prominent episode in the life of the company was the 1988 bidding war for RJR Nabisco. Forstmann Little offered to acquire RJR Nabisco, but the management (chiefly F. Ross Johnson) instead chose Shearson Lehman Hutton. In the end, the board of directors chose Forstmann Little's arch-rival, Kohlberg Kravis Roberts & Co.
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.
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 ]
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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.
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 ]