Mammoth Bidding For RJR Gets Bigger
Mammoth Bidding For RJR Gets Bigger
Nov. 21, 1988
NEW YORK (AP) _ The slugfest bidding for giant RJR Nabisco Inc. has gone into extra innings, with enriched offers from two existing bidders, a record proposal from a new suitor and indications that the multibillion-dollar free-for-all may get even wilder.
RJR Nabisco Inc.'s stock surged in heavy trading today after directors extended the record auction for the company, including one tentative offer possibly worth $26.6 billion, or $118 a share.
RJR's stock jumped $2.37 1/2 to $86.37 1/2 this morning on the New York Stock Exchange, where it was the most heavily traded stock with more than 1.44 million shares changing owners.
A special committee of RJR Nabisco's board of directors announced the new proposals late Sunday and said it was extending the deadline for receiving further offers to buy the food and tobacco conglomerate.
Not only did the new buyout plans top previous bids, which already were in the unprecedented $20 billion range, the committee said every bidder could submit revised offers, signaling that the hefty bids it had gotten so far might not be good enough.
The committee, which is overseeing the auction of RJR, also has told its own advisers to continue exploring ''all forms of restructuring'' that could provide an alternative to the current proposals.
''While no assurance can be given that any transaction will occur, the Special Committee expressed its belief that that process which it is overseeing will benefit all shareholders,'' said Charles Hugel, RJR Nabisco's chairman and head of the five-member committee.
Jostling for approval are these proposals:
-A $100-a-share cash and securities offer estimated at $22.5 billion from a group led by RJR Nabisco senior management and the investment firms Shearson Lehman Hutton Inc. and Salomon Brothers Inc. That group, which last month touched off the buyout battle with a proposed takeover, previously offered $92 a share, or $20.7 billion, for RJR's 225.3 million common shares outstanding.
-A $94-a-share cash and securities offer worth about $21.2 billion by a group led by buyout specialist Kohlberg Kravis Roberts & Co., which previously offered $90 a share.
-A preliminary cash and securities proposal from a group led by the investment firm First Boston Corp. and a partnership that includes Chicago's Pritzker family and Denver billionaire Philip Anschutz. First Boston indicated it valued the total consideration at from $105 to $118 a share, making the deal worth $23.7 billion to $26.6 billion. The biggest acquisition on record is Chevron Corp.'s $13.4 billion purchase of Gulf Oil Corp. in 1984.
The offer involves acquisition in 1989 of RJR's tobacco business, which accounts for about 40 percent of its annual sales, and the sale of its food businesses.
All three proposals would retain some stock in the post-buyout company for current RJR shareholders.
The committee will accept bids through 5 p.m. EST on Nov. 29. The panel initially cut off the bidding at 5 p.m. last Friday, and its army of high- powered financial and legal advisers worked through the weekend to analyze the various proposals.
RJR Nabisco stock finished at $84 a share in heavy trading Friday, after a week of rumor-driven battering that saw the stock close as low as $82.75 a share on the New York Stock Exchange.
Atlanta-based RJR makes hundreds of consumer items such as Jose Cuervo tequila, Salem cigarettes, Life Savers candy, Oreo cookies, and Milk Bone dog snacks.
It was not immediately clear whether the bidders were ready to escalate the already tense takeover fight.
Officials of Kohlberg Kravis group and the RJR management group that submitted the previous offers said they were undecided about their next moves.
But an attorney involved in the management offer complained about the delay.
''We won according to the rules and they changed the rules to accommodate a grenade that was lobbed in at the last minute,'' Jack H. Nusbaum, who represents Shearson and Salomon, told The New York Times.
The First Boston-led group declined comment Sunday.
The Kohlberg and management groups' offers are for leveraged buyouts, in which most of the money for the purchase would be borrowed and later repaid with the company's cash flow or the sale of its assets.