Friday, January 4, 2008

It will soon be 20 years since F. Ross Johnson, CEO of RJR Nabisco, led Wall Street out of the October 1987 crash into what was then the largest leveraged buyout (LBO) in U.S. history. Black Monday 1987 had harmed many stock values, and highly publicized tobacco liability litigation was also hurting RJR Nabisco.
Johnson, nicknamed "The Pope," made a $75 million sweetheart deal with his directors, according to the then-bestseller, Barbarians at the Gate, by Bryan Burrough and John Helyar.
Everyone on Wall Street looked for a way into the deal. First, investment bankers who saw the huge cash flow from the company's tobacco arm. They and many others would reap huge fees associated with the restructuring of the company. The prize, such as it was, would go to Kohlberg, Kravis,Roberts, and the money that blew around the eye of the storm amounted to about $20 billion.
It seems like a long time ago now, and some of the characters in the story (which was made into a Hollywood movie) are still around. The bestselling book is a reminder that business history can provide some swashbuckling reading, and our store has an interesting section specializing in business history.

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