One read Ting Feng said the rain

One read Ting Feng said the rain

Speaking of leveraged buyouts, leveraged conagra annual report buyouts pile can not fail to mention the case of the 1980s - the United States Reynolds - Nabisco (RJR Nabisco) company acquisition. This is called "Century acquisition" deal to $ 25 billion purchase price shocked the world, becoming the largest in the history of a leveraged buyout, leaving conagra annual report the subsequent acquisitions of each pile to catch up. This major acquisition campaign in RJR Nabisco's senior management and the famous acquisitions between companies KKR (Kohlberg Kravis Roberts & Co.) Company started, but because of its huge, there are many of them, like Morgan Stanley, first Boston directly or indirectly involved in this investment banks and financial institutions. "Battle" is the initiator of Ross Johnson of RJR Nabisco, led by senior managers, they think the share price at the time the company was grossly underestimated. October conagra annual report 1988, the management proposed to the Board proposed management buyout equity purchase price of $ 75 per share, totaling $ 17 billion. Although Johnson's bid was higher than the market value of the company's stock $ 53 / share, but this has not satisfied the Company's shareholders. Soon, Wall Street's "King of the acquisition" KKR companies to join the fight, after six weeks of fighting, KKR win the final purchase price is $ 109 per share for a total amount of $ 25 billion. KKR itself spent only $ 15 million conagra annual report in funding, while the remaining 99.94% of the funds are relying on junk bond king Michael. Milken (Michael Milken) raised the issue of junk bonds. First, the relevant background conagra annual report on the RJR Nabisco as the largest U.S. food and tobacco manufacturers, Reynolds - Nabisco conagra annual report established by the U.S. food manufacturer Standard Brands Company, Nabisco company and one of the two major U.S. tobacco companies RJR Company (Winston, Salem, Camel cigarettes manufacturer) merger. At the time it was ranked nineteenth conagra annual report in the U.S. industrial companies, 140,000 employees, with many brands, including Oreo, Le Chi biscuits, Winston and Salem cigarettes, Life Savers candy, retail products throughout the United States conagra annual report each shop. Although RJR Nabisco food business after the merger has been the rapid expansion of the two, but still lucrative tobacco business is about 58% of the main business. Johnson's two-year term at the time, RJR Nabisco profit rose 50 percent, good sales performance. But with the 19 October 1987 stock market crash, the company's stock price plummeted conagra annual report from $ 70 vertices, even though the company had a lot in the spring conagra annual report buying their own stock, but the stock has not only failed to rise, but fell to $ 40. In December, the company's profit despite a 25% increase, food stocks are also rising, but RJR Nabisco's stock affected by tobacco stocks or nobody cares, or 60% of sales from Nabisco and Del Monte Foods Company. Tobacco and food company trying to put together business, but did useless, decentralized operations conagra annual report have lost effectiveness. About Management RJR Nabisco to Ross Johnson of RJR Nabisco, led by senior managers is the initiator of this acquisition event, this group includes Reynolds Tobacco Company's head - Ed 霍里希 root Chairman of the Board Nabisco Jim Weier Qi, General Counsel Harold Henderson, the independent directors and consultants conagra annual report Andrew GC Sage II and so on. Ross Johnson, who do not have much ability in management, 40 years old in the U.S. business community is also unknown. In a headhunter's help, he became president of the company's signs, 1984 Ross Johnson served as Nabisco CEO, 1985 was completed in Reynolds - Nabisco merger, the following year, he became RJR Nabei Si grams of the company's CEO. Johnson conagra annual report innovation, under his leadership, the Reynolds Tobacco Company in the year generated $ 1 billion on the value of the product. However, in the control of the Board of Directors of RJR Nabisco, the Johnson revolutionized this enterprise, especially Reynolds Tobacco Company. Although the cash-rich company, but relatively conservative culture, closed, corporate managers had no creativity and enterprising founder, the decision is also cautious, few breakthroughs. conagra annual report Johnson's arrival did not bring much innovation to their business management, his biggest hobby is to spend a lot of money. If you just stay in the luxury excessive consumption, Johnson will not be noticed. He has more ambitious plans, and that is through the management involved in the acquisition, will become an RJR Nabisco private enterprises. About Kohlberg - Kravis - Roberts Company (KKR) KKR was founded in 1976 as the first leveraged buyout firm, KKR has had outstanding performance, it excels MBO, it is often said that "management buyout . " However, with the further understanding of other people's leveraged buyouts, leveraged buyout firms gradually increased to 1987 there has been the industry crowding. Kravis and Roberts made a firm decision: to target the bulk of the business acquired business five billion one hundred million U.S. dollars between -100. Because such a large business rarely meddle, while KKR has already been made like $ 6.2 billion acquisition of Beatrice, 44 billion acquisition of Safeway, as well as $ 2.1 billion acquisition of Owens - Illinois (Owens-Illinois) such large transactions. From June 1987, KKR began to use all public conagra annual report methods to raise funds, in order to stimulate more investors joined the company conagra annual report proposed management fees until 1990 to complete all transactions can be reduced, to the end of the raise, raise The funds have been $ 5.6 billion. In the world of about $ 20 billion leveraged buyout transaction, KKR accounted for a quarter! Second, the acquisition process in October 1988, with RJR Nabisco CEO Ross Johnson as the representative of the management options proposed recommendations to the Board on the management of the acquired company. MBO management's proposal includes plans to sell after the completion of the acquisition of RJR Nabisco's conagra annual report food business, leaving only its tobacco operations. Its strategy is based on consideration of the market for the tobacco industry to underestimate the huge cash flow, as well as food service operations due to mixing with tobacco without being fully recognized its value. Restructuring will eliminate the adverse market factors undervalued, and thus reap huge benefits. Ross Johnson conagra annual report and Shearson's leveraged buyout plan hit it off, both sides believe conagra annual report that the acquisition of RJR Nabisco stock price should be around $ 75 per share, about $ 71 higher than the stock's market price, for a total transaction conagra annual report value reached $ 17.6 billion. Since independence Shearson want to complete the deal, so they do not have the power to introduce junk bonds, about $ 15 billion of funds all need the help of commercial banks loans. Bankers Trust blue-chip companies to seize the opportunity to provide financing for leveraged buyouts, raised $ 16 billion worldwide, but according to Shearson accounting only $ 15.5 billion. Wall Street investment bankers still reacted instinctively: The offer is too cheap! Johnson was robbed company! While Johnson and Shearson name of wishful thinking when KKR's conagra annual report bid to participate in the MBO program makers to make a rude awakening. CEO Ross Johnson with the planned spin-off in sharp contrast, KKR want to keep all of the tobacco business and most of the food business, but KKR call for $ 90 per share offer. Shearson and KKR contest began. Shearson chose to cooperate with the Solomon companies to raise funds, but in terms of resourcefulness, or finance, the Shearson can not confrontation with KKR. Drexel KKR and Merrill Lynch have a consultant, and the introduction of PIK preferred stock purchase bid, the price reached $ 11 per share, nearly $ 2.5 billion, the world's demand for the stock to make it PIK quickly converted into junk bonds, which means that there is $ 2.5 billion of capital. However, Johnson management agreement and the "golden parachute plan" exposure, angered RJR Nabisco's shareholders and employees. Worth nearly $ 50 million for 525,600 copies of restricted stock plan, generous consulting contract, each resulting in 1500 restricted stock, so Johnson in the acquisition regardless of success or failure are unscathed. Johnson this greed would make the MBO lost the support of the people. Finally, KKR to $ 109 per share, totaling $ 25 billion, won this battle victory. In the final round of bidding Shearson and KKR offer only a difference of $ 1 for $ 108 per share. But RJR Nabisco shareholders of the company to make a final decision is not the difference between the purchase price. KKR guaranteed to give shareholders a 25% stake, Shearson only to shareholders a 15% stake; KKR commitment Nabisco sold only a small portion of the business, and Shearson have to sell all business. In addition, shareholders also lists other dozen different points. In addition, Shearson not proven its reliability through the restructuring of the securities, do not get bit in the security aspects of employee benefits. conagra annual report Because of these reasons, the shareholders of the company ultimately chose KKR companies. Purchase price is $ 25 billion, in addition to $ 14.5 billion syndicated loan, the Drexel and Merrill Lynch also provides $ 5 billion bridge conagra annual report loan, waiting to issue bonds to repay. KKR itself provides $ 2 billion (of which $ 1.5 billion is the capital), in addition to providing $ 4.1 billion for preferred stock, $ 1.8 billion conagra annual report for RJR transferable bonds and receives $ 4.8 billion debt owed. Signing date of the acquisition is February 9, 1989, more than 200 lawyers and bankers attending Hanover conagra annual report Trust and Investment Corporation from banks around the world raised $ 11.9 billion. KKR total of $ 18.9 billion, to meet the cash portion of the acquisition commitments. In fact, the whole transaction costs amounted to $ 32 billion, of which support conagra annual report the leveraged buyout junk bonds notoriously Drexel company charges more than 200 million U.S. dollars, Merrill Lynch more than 100 million U.S. dollars, syndicated financing costs more than 300 million U.S. dollars, fees and charges, KKR itself up to $ 1 billion. Third, after the acquisition of the successor Ross Johnson, conagra annual report Louis Gerstner became after the acquisition conagra annual report of RJR Nabisco CEO of the new term, his original company carried out a bold reform, a large number of companies sell luxury amenities. Companies report shows that in 1989 the company's net loss of $ 1.15 billion, after repayment of $ 3.34 billion in debt in the first half of 1990 has $ 330 million in losses. However, from the company's cash flow point of view, everything is fairly normal. Nabisco's operating profit in 1989 reached a cash flow of 3.5 times before, but Reynolds Tobacco Company is still in a state of readiness. March 1989 RJR stopped production of cigarettes Prime Minister, then, the company had layoffs, reducing the number of workers to 2,300. Under the leadership of new manager, conagra annual report the company improved the equipment to improve production efficiency, while slashing conagra annual report the cost, making the company's tobacco profits in the first half of 1990 increased by 46%. But when cash settlement conagra annual report with the tobacco brought junk bonds, Reynolds rival Philip Morris has increased sales strength, reducing the price of tobacco. conagra annual report According to the analysis, RJR's tobacco market shrank by 7% -8% in 1989. The issue is not just KKR legacy of meager financial returns, but also in the failure to introduce leaders in other industries. Both the Express Company hired Jess Teller Road (Lou Gerstner), or ConAgra Charles (Charles Harper), they have neither the slightest experience of tobacco, and this line is no enthusiasm. After the performance continued to decline in early 1995, KKR had they stripped the remaining conagra annual report equity Reynolds Nabisco, Reynolds Tobacco Holdings has once again become an independent company, and Nabisco food has become an independent production company, Renault and Nabisco and returned to their starting point. In the first half of 2003, Reynolds's conagra annual report sales fell 18% over the previous year, only $ 2.6 billion, while operating profit fell 59 percent to $ 275 million. Fourth, a brief review occurs between investment bankers conagra annual report and corporate managers battle for control of the ultimate beneficiary is the enterprise's shareholders, which from RJR Nabisco's shareholders after the completion of the acquisition of riches can be proved . In the acquisition of formal point of view. LBO process in general, conagra annual report investment bankers and will advance the management of the target company to reach a consensus between the two sides have recognized the completion of the acquisition price and financing, and corporate management after the acquisition and asset restructuring has also made arrangements to minimize the cost of improve efficiency, while the sale of assets conagra annual report to repay. However, due to KKR's acquisition of RJR Nabisco activities prior knowledge, there is no communication between management and they even this enterprise assets conagra annual report do not know, ultimately, to bid in the form of participation.
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