Private Equity Experience
Demystify the world of private equity with insider knowledge.
Join hosts Ed Barton, Rory Liebhart, and Emily Sander - seasoned professionals who have worked from all angles as C-suite leaders, private equity managing directors, and investors.
In this podcast, they break down complex private equity concepts into everyday language. You'll gain a clear understanding of the PE landscape, key players, and market dynamics. Expect practical insights on deal-making, growth strategies for founders and management teams, and exit strategies. Plus, hear real-world examples and real-time breakdowns of trending news stories.
Whether you're a seasoned pro or just starting out, considering selling your company to a private equity firm, or simply curious about this lucrative world, this podcast will help you navigate the private equity landscape with confidence.
Private Equity Experience
Barbarians at the Gate Movie Watch-Along: The Ultimate LBO Battle
Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.
Grab your popcorn! In this special inaugural watch-along episode of the Private Equity Experience Podcast, hosts Emily Sander, Ed Barton, and Rory Liebhart watch and react in real-time to the 1993 financial classic, Barbarians at the Gate. Based on the legendary 1988 leveraged buyout (LBO) of RJR Nabisco, this movie details the greed, corporate excess, high-stakes boardroom warfare, and private equity maneuvering between CEO F. Ross Johnson and KKR's Henry Kravis.Ed, Rory, and Emily provide running commentary on the financial mechanics, corporate governance dynamics, bidding war psychology, and how dealmaking has evolved from the wild 1980s junk-bond era to today's PE universe.
The Deal That Defined Private Equity: The $25+ billion takeover of RJR Nabisco by Kohlberg Kravis Roberts (KKR) remains the benchmark mega-deal that transformed modern corporate finance and institutional buyouts.
MBO vs. External PE Sponsors: How Ross Johnson's attempt to take RJR Nabisco private via a Management Buyout triggered an open auction that ultimately cost him control of the company.
Corporate Governance Lessons: The critical role of independent board committees, conflict-of-interest disclosures, and shareholder value maximization when management participates in a buyout bid.
The Evolution of Debt & Leverage: Contrasting the high-yield "junk bond" frenzy of the 1980s with modern PE capital structures, covenant packages, and debt underwriting standards.
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Who Are We?
Three insiders. One mic. All things private equity — explained. Hi 👋 We’re Ed, Rory, and Emily — a CEO, a CFO, and a Chief of Staff — here to demystify the world of private equity. Between us, we’ve sat in the founder’s chair, run PE‑backed companies, and worked on the deal side, so we know the wins, the pitfalls, and the jargon (and we’ll explain it).
Through the Private Equity Experience Podcast, our book On‑Ramp to Exit, and a library of free tools and templates, we share real‑world stories, practical strategies, and insider insights to help you navigate every stage of the PE journey — whether you’re leading a portfolio company, joining a deal team, considering PE, or just PE‑curious.
Podcast Intro
Welcome to the Private Equity Experience Podcast. Your backstage pass to the strategies, stories, and secrets that drive value in the PE universe. No filters, no fluff, just straight talk and expert insights to help you navigate the private equity world with confidence. And now your hosts, ed Barton, Rory Leaphart, and Emily Sander.
Watch Along Setup
Welcome to a very special PECS episode. This is the inaugural watch along episode, so we are going to watch a movie together- First ever and- This is gonna be either really great or disastrous, but I love it all We'll see how many people watch the very end, but our first movie is- Yeah Barbarians at the Gate- Yeah which is a 1993 movie, so, um- Good vintage, yes pretty old movie. Um, not gonna lie, the cover of it looks super boring. I have never seen this, but Ed literally almost had a conniption when he saw this movie. Yeah. It's one of his favorites. So- Definitely got me fired up. I had, uh- We're gonna watch this long been wanting to watch this. Never had, but here we are. Oh, okay. This is awesome. I'm seeing it for the first time, so I'm very f- Oh, cool, cool I'm familiar with the story, but not the actual, you know, book or, you know, the movie itself. So yeah, it'll be cool. Cool.
Movie Premise Explained
Ed, do you wanna give us, like, a 30-second, like, trailer preview description? Like, what, what is this, what is this movie? Yep. So Barbarians at the Gate is a, is a, I wanna call it more of a mockumentary or a historical- Yeah spread on, um, the acquisition of, uh, RJR Nabisco, and one of the l- in what, at the time, was the largest leverage buyout by private equity in, in, uh, history. Um, and kind of the, the workings of that and how the deal was put together and how management interacted, and so it kind of plays... All the stuff we've been talking about are all in the movie. All right. Beautiful. So you're gonna... If you're listening to this, you'll hear the movie in the background. If you're watching this, you can actually watch the movie with us- Yeah and then you'll hear our, uh, witty banter, uh, as commentary- as we go along. Here we- We hope it's witty. Here we go. You'll, you'll hear our commentary. Yeah. Uh, the following is based on the truth, uh, as as that may seem. That's the text on the screen. Man, this is old. Okay. Truth is stranger than fiction. We know this. This is, uh, definitely not HD, so whatever the opposite of that is, is what we're seeing It says HD on the screen
Ross Johnson Origins
In a faraway world, billions and billions of dollars ago Yeah, that would need to be T and T ago now, showing Winnipeg, Canada, 1940. This little kid is waking up, putting on his glasses. Definitely a nerd. Gonna- What? do some newspaper runs with his bike. Vintage bike. Yeah Seems, uh, industrious from a young- Yeah young age. 1940. I remember those days. Could have been Paperboy too. I was a paperboy. Yeah. James Garner is in this movie. James Garner. Wow. It's got James Garner, Jonathan Pryce. It's got, it's got some really- Good, awesome cast it's got some good ones in it. Jonathan Pryce is in everything, man. Real luminaries. 'Cause he's an excellent actor. Yes. There we go, Jonathan Pryce. This is an art, to throw a paper and not fall off a bike. Peter Riegert. So we have, uh, we have- Ross wait, is that- the Blues Brothers appearance Mr. Johnson? Or not of the Blues Brothers, but we have- Oh, Mr. Johnson? I'm starting to sell subscriptions to the Saturday Evening Post. Can I put you down for one? I'm not much for magazines. How about if I give you the first month free? And a week's free newspapers? Ross Johnson, you could sell ice to an Eskimo. I'd sure give it a try. Thank you, sir. Don't know that that language is very PC anymore- You can't say that anymore but I appreciate it. Yeah. You can't say that anymore. I appreciate it. In 1940, that was very PC. Yes. All right. This, the boy has grown up into a young man, still riding a, a bike with a basket on the front. Don't know how manly that is, but that's fine. Knock the little, what do you call those? Incidents? Are those bats? You got Tom, you got Tom Aldridge in here too. So like you got Sopranos actors and you've got, uh, what's that good stuff? Animal House. Music by Richard Gibbs. That's the music I hear right now. Patrick Kennedy He walks very properly and upright Mrs. Vitelliano? F. Ross Johnson, Peerless Child Photographers. No, thanks. Even if you don't want any pictures, I gotta tell you, I see babies all day long, but that is one exceptionally beautiful child. Can I ask her name? Marvin. What can I tell you? He's pretty enough to be a girl. You know, that being the case- Mm I'm gonna offer you, give you is more like it, a set of six pictures in an ordinarily $5 walnut frame, all for just the one price of $2.98. Tell your mom you want your picture taken, Marvin. No taker. Well, there you go. You heard it from his own lips. Oh, well. Door-to-door salesman. This might remind me of somebody we worked with in the past, the three of us. Ed Horigan there. Tell him it's Ross Johnson. Ed, can you hear me? It's Ross. Now we fast-forward in time. Did you get his tape yet? Here's James Corden. Ah, great. I'll tell you when. Yeah. Make sure somebody keeps the senator's glass full. We'll be there in a jif. What kind of car should he add? That's a Lincoln. Yeah. It's a Lincoln Town Car. It's gonna be a Town Car there? Yeah. Town Car or Lincoln. Getting out of that nice car, going to an event with paparazzi. I tell you, 19- in 1993, I fell in love with the running chair Or Chasey, but out of my league. She, um, is not the same age as he is. Not bad for just a poor Winnipeg guy. Not bad at all. What do you think? Atlanta, Georgia, 1980. You want to fly to Palm Springs when this is over, or you want to wait and go in the morning? In the morning. Wouldn't mind getting an hour's sleep. You're getting old. One of us has to. Hey, Ross! We also have to play the games Hi, guys. Johnny. Ross. Man, nice to see you here. Yeah. How are you? Have I got a great joke for you, Ed. Well, I hope you'll like it as much after you've heard it. See- Smoothing is a timeless art. It, uh, it will never be replaced by AI, that's for sure we were playing golf one day- No, go ahead, Ross. All right. Well anyway, she gets stung by this bee. She goes to the doctor and the doctor says, "Just exactly where did it bite you?" And she says, "Between the first and second hole." And he said, "No kidding. You must have a pretty wide stance." All set now, Ross? Oh, right, great. This crowd is gonna go bananas. Oh, honey, honey, go rescue the mayor. His wife's starting to talk dirty. Hairstyles and rubber for screaming eating Boy, John, I hope everyone enjoys the tree. It's great. Your face gets any longer, I can practice putting on it. Come on, Ed. Oh, my goodness You leave my boy alone. It's just this kind of spending is crazy, Ross. Oh, John, the company's making so much money, we're shitting green. Hell, this all comes out of petty cash. Showtime Listen up everybody Heavy cash is a thing of the past too, I feel like. I mean- Quiet down everyone. Attention there please. There's no cash. I wanna extend a warm welcome to everyone here tonight on behalf of RJR Nabisco from our chairman, Charlie Hugo. Ed Horgan, president of our tobacco division. And if you think his numbers are good now, just wait until people start buying Premier. Right. And of course, Johnny Grannis, president of Nabisco. From each and every one of us, all the way down to me. Now, soon as these guys up here take care of business, I'm gonna have a little extra treat for you, in case anybody missed the 6:00 news or might have spent the day on Uranus. But no matter how this little Donnybrook turns out, we're all winners here tonight, right Ed? I'll drink to that. Look at that, boys. Those are like the main players. Pop your socks going up- Yeah and have a great time. There's plenty of booze, and if you don't think so, you're just not trying hard enough. So enjoy the fight. Thank you. Rocky Tyson, jumped right into his cha- Come on, stick it, stick it. Come on, stick it Enjoying it? Come on. Working around. Good night, Mike. Good fight, huh? That was Mike Tyson. Mike Tyson and Leon Spinks. Some kind of fight, ain't it? Oh. Not going to make it. It's all over You know the main character in this movie, the head of the disco? Bruce Lewis wasn't anxious Martin Conley So this is at the RGR headquarters in Atlanta. Yeah Victory to head the Democratic ticket come November. Well, in the New Jersey Federal Court today, it was a victory of sorts for widower Anthony Cipollone. Cipollone had sued for millions, claiming cigarettes were a contributing factor in the death of his wife, a lifelong smoker. Tobacco companies breathed a sigh of relief when today's jury cleared the industry of any responsibility and awarded the widower the relatively small amount of $400,000 in damages. A tip for Tony Cipollone. What is that in today's money? In today's money? About a million bucks. Yeah? Maybe a little more Shit, the fucking stock hasn't budged, Ed, not one fucking point. Hiya, Dad. I thought the Cipollone decision would plump a little sunshine up our skirts. We're still stuck in the fucking 40s. Thanks, Martha. Any fucking time. I mean, everybody's picking it up. Did you see the hatchet job in Business Week? Like, "RJR low stock price, tobacco company declining performance, executive extravagance." I love this. Gee, Dad. "CEO-" Yeah M. Ross Johnson routinely presses $50 bills into the hands of wine stewards." I saw that. $50 bills. Jesus, been years since I tipped that little. Hey, you let them bitch all they want about the stock, Ross. Wait till Premier's hit the market. Yeah, where are we on the test results? Oh, a week, 10 days the latest. They're gonna be great. Trust me. They damn well better be. Put a rocket up Winston-Salem's ass, will you, so we get them ASAP, okay? You got it. I'll see you at the Springs party. All right. Well, hi there, cutie How you doing, pal? What'd you do? Did you sneak up here from coach? You don't mind, do you, mister? So note the dog gets to travel on the private jet as well. I just think you're neat. Yeah, yeah. Easy, Lar. Not in front of the dog. Definitely a service animal, for sure. Comfort animal. Yeah. Comfort animal. Just for the whole tournament. Palm Springs, baby. Golf tournament. Oh, we're gonna have a great time. And Nabisco Down the Shore, I remember when that was on TV. Oh, yeah? I'm of a different vintage than you two of you. You know, I, I was a little older. Well, we just seen that this guy is like promoted and acting- Well, I'm not gonna say you threw a great party last night. I must have really been wasted. I didn't realize these watches- All over the place you were giving out were Guccis for Pete's sake. You fly Nabisco, you go first class. You have a good one, Jay. John, forget what all this costs. Eh, th- this bunch this weekend. Huh? How many supermarkets do you think they owns between them? What, 8,000, 9,000? Well, every time one of these guys gets home and he shows off his Gucci and his free Polaroid and his picture with Arnie or Reggie, whose merchandise do you think he's gonna put on his shelves, huh? Lighten up, John boy. Every penny you think I'm pissing away here comes back to us dressed up like a nickel. Don, Ira. All right, guys. Gotta help out the audience here. So who is- Well, this- Who is that guy? Perfect turnout, Ross so that's John Greenhouse, and John was the, um, president of Nabisco. So you had two divisions. Don't get me started. For Carol, who damn near fell about the price of their RJR stock. Now, w- just wait a minute. You had Nabisco and RJR, the tobacco side. Tell her to stop reading that magazine of yours, okay? Okay. Soon as we introduce Premiers, the damn stock's gonna go through the roof. Ed tells me that the test results are gonna be dynamite. Well, that'll sure help take some of the pressure off. All we want you to do is make us as rich as possible, Ross. That's all we're asking. That's it. Or you'll find somewhere- Right Not too much to ask. But you could see, you could see how kinda companies, private equity guys look at this and they go, "Okay, how much of this is necessary?" Exactly. Yeah. We're in the welfare companies. Free cash flow available. Yeah. One of those LPOs, that's what you're talking about. How much of what is necessary? You know how much money Don made on that? The, the, the spend, the expense, the bullshit. Dinosaurs, the Gucci watches. Yeah. The, the Leon Spinks licensing thing. Yeah, I heard they're gonna bury you with one set of golf clubs. There's no question he can do what he did to me Lori, how would you rate that swing, that golf swing? I know he'd be delighted to work with you, Ross. Ugh, serviceable but not great. Definitely not a, not a professional golfer, that's for sure. He engineered that buyout. And there's this thing. The first food company buyout, he practically owns a patent on the process. What kind of fee does he get? What was his cut for setting up your deal? 1%. $45 million. 1% sure has come up in the world, hasn't it? On the Safeway buyout, he and his cousin George pocketed 60. $60 million apiece. If those guys aren't careful, they're gonna get seriously rich. They can do the same thing for you, Ross. You talk about- And the stockholders. Kravitz and Roberts. So KKR founders. Yeah. Oh. They facilitate- they, they were one of the early players in LBOs. Yeah. No offense, Don, but, uh- Before KKR was humongous we're not buying out RJR Nabisco here. We're talking four, $400 million. But KKR is humongous. How natural are you thinking? Oh, there's definitely a select bucket. Henry has the ability to borrow as much as $56 billion. Makes your 400 million seem a little like pin money, doesn't it? Well, every little bit helps, Ross. Every little bit helps. How'd we do? Well, we each owe Don three bucks. I hope this puts the son of a bitch in a higher tax bracket. Classic golf banter. Oh my God New York City. That is a fancy- Good evening, sir. Right in there fancy penthouse Of course. Yeah. Yep. Welcome to- Opulent Welcome to the Kravitz residence. Yeah. Whoa. Yeah. Ross. Don, it's nice to see you again. It's good to see you. Will you have a drink, sir? Scotch and soda. No ice, no soda. Thank you, sir. Amen, brother. No ice, no soda You're ever so humble, huh? That guy must have had a hell of a week Renoir Ballpark? 28, 30 million Is that with the frame? Some really good one-liners, man. I like it. Oh I can't imagine buying art that's 20 to 30 million Money. Yeah, right. Tons of it. Don. Henry, say hello to Ross. Henry Kravitz. Ross. Yes. Nice of you to come. Ooh, Jonathan Pryce. Now listen, Henry, if there's anything you need, if you're hurting in any way at all, all you have to do is ask. The thing is, it looks like a normal cigarette, only when you light up a Premier, it's completely smokeless. Totally? Near enough. The point- Now- is that it produces absolutely- this is that- no tar or any of that other fun cancer stuff we're gonna pony up to the founder and get you comfortable part. Yes. Mm-hmm. Rams your heart- It's a sales process by private equity at this point you can't say that. But Price, you get more carbon monoxide from a New York bus going by than you can from any cigarette. Uh, maybe just a little more chicken. It's rabbit. Oh, I'll have the ears, too, when you get a chance. You're counting on Premiers getting your stock up, obviously. Nothing else has made it move. It's a bitch. I've got the best company in the world, and not just because I'm in charge. You could put your crazy old aunt in it, and she could run Nabisco. You know, our food assets are unbelievable. Kids pop out of the womb asking for Oreos, and it doesn't make one damn bit of difference in the price of our shares. People still think of us as a, only a tobacco company. They're so scared we're gonna get sued out of existence, it just murders us. There is a cure for that. Oh, that LBO stuff's- Mm. way over my head, Henry. I just can't follow it. You don't have to. Bankers and lawyers work it all out. Well, all I want from bankers is a new calendar every year, and all I care about lawyers is they're back in their coffins before the sun comes up. I take offense to that remark. That's when management takes over. It's simply a question of arriving at an attractive price to pay your stockholders to buy out their shares. I'd work with you the same way we did with Don. Some of the money we borrow, some we raise from the public sale of securities. We pay off the debt incurred in buying the company with cash from its ongoing operation and by selling off pieces of the business. That's French for firing people, isn't it, Henry? As few as possible, of course. Few dozen? 10,000? As I said, as few as possible That's it. That's the whole playbook, everybody. That's it. There you go. There you go. I'd take care of that. Yeah, I don't shave your face in my mirror every morning. All that aside, I've never been a big fan of debt. Debt can be an asset. Debt tightens a company. Yes, it does. Works for the sphincter too. Does wonders for the sphincter too. Yeah, Kravis was not blinking when he said that. You can take a look at your numbers. No. Get an idea of the value- It's an asset on someone else's balance sheet as part of your Sure Nothing to base a deal on. Tell me one thing. If we did do this thing together- Who'd be in charge? Who'd run the business? How does that work? Ask Don. I run my company. Henry and his cousin George are the majority owners, but they maintain a, a total hands-off policy. What's the catch? The catch is we like people who know what they're doing, doing it for us. We think you're one of those people, Ross I like smoke, damn it 10 percentage points when just two weeks ago Dukakis was ahead by 17. In New York- Now, Malcolm Price reminds me of a certain private equity- investigators revealed that junk bond king- managing director we've worked with before Michael Milken, who is earning- Yeah top the $500 million mark- In this role and 26 other members of Milken's investment- Similar sense of humor were owners of a stake in the company owned by dethroned financial wizard, Ivan Boesky. Boesky, convicted on charges of insider trading- I'm actually laughing at the subtitles. 15 months ago- If you were to see the subtitles of the spelling, I think it's great. I know. Yeah, yeah, yeah. You know the three rules of Wall Street? Never play by the rules, never tell the truth, and never pay in cash. They earn their money the old-fashioned way. They steal it. Ross, you promise you won't think I'm stupid? Of course not, although I have been known to break my promises. There's just so much about this I don't get. Insider trading, junk bonds, even this buyout thing you're talking about. Sweetheart, half the people involved don't know what's going on. That's true. The buyout's not all that hard really. Basically, all a buyout means is that management, the team that runs the company- Hmm they buy out all the shareholders and the company goes from being public to being private. Doesn't that take a ton of money? That's where the Kravitz types come in. Indeed. They help you borrow what you need against the assets of the company, and they use the business as collateral. So it's just like mortgaging a house. I hate to tell you this, babe, but you got a lot to learn about being successful. More like mortgaging a rental property- Now, the problem is- so you can get cash flow from it, but yeah guys like Henry is your partner, and they're two miles up your ass- A very concept with a power tool making sure you do things their way. You gotta see that apartment. Makes Buckingham Palace look like a Burger King. Nobody gets that rich letting anyone play co-god with them. How you gonna handle that? Nothing to handle. There's no way I'd hook up with Henry Kravitz. No, if we ever made a deal, he'd have my desk in the men's room in five seconds flat. All we have to do- Foreshadowing is just stay cool until- Yes Henry gets the test results on Premiers. You watch. You just watch. Those babies are gonna turn the whole company around. Now, of all the people we interviewed- Winston-Salem, North Carolina 86%- Yep approved of the idea of a smokeless cigarette, and 41% said that they'd be willing to try at least two packs before deciding whether or not to switch brands. Of those who had given up cigarettes, 73% responded favorably to the idea, saying that they would seriously consider smoking again if they could be positive- Yeah that the cigarette that they were smoking was absolutely smokeless. Now, 8% of that group sampled at least one Premier to give us their opinion of the product. Let's get some more people smoking My favorite. My favorite Of all the groups we tested, the response to Premier was just about uniform. Mm-hmm They all said they tasted like shit. Like shit? Shit was the consensus, yes sir. They all said that? Nobody liked them? Fewer than 5%. You said you heard the results were terrific. Well, there's nothing wrong with 5%, Ross. I'll take 5% of the smoking market any day of the week. How much are we in for up to now? To date? To date. To here. To now. Upwards of 350. We've spent $350 million and we've come up with a turd with a tip? God almighty, Ed. So their, so their cigarette branch is not doing well. We poured enough technology into this project to send a cigarette to the moon, and we come up with one that tastes like a doggone gump? Well, we haven't even talked about the smell. Well, what'd they say that was like? Is that what this is telling us or no? A fart? Well, it's probably pretty profitable. It's just not growing. And so with- Okay with public equities, you're always looking for growth, right? Like, that's the thing. So you're always looking for that next thing. Tastes like shit and smells like a fart. Got ourselves a real winner here. It's one goddamn unique advertising slogan, I'll give you that. $350 million? What the hell's wrong with that? I don't smell anything. Uh, that's not the way to find out, sir. You see, if you light a Premiere with a match instead of a lighter, the sulfur reacts badly with the carbon in the tip. Do we have to have the carbon? That's what makes it smokeless. Well, how do we get it shitless? But that's hard to say. I mean, given enough time, we- We don't have any time. We've announced they're coming out this year. You insisted on it. Because you did. Because you said they'd be ready. Well, they are ready. This is a classic executive type of a argument here. I don't have to tell you what's riding on these goddamn things. And what the hell's wrong with the draw? You need an extra set of lungs just to take a drag. Yeah, it is a little difficult. A little difficult? It's what we call the hernia effect. The hernia- Is that what we call it? Well, there's another great billboard for you. What do we do? We give away a truss with every pack? Warning, this cigarette can tear your balls off. They're not so bad. Stop jerking off, Ed. Who the hell would sneak into a john to smoke one of these? Wherever you light one up, you're in the shit house, and I'm beginning to get the same feeling myself. Were those real Premiere cigarettes? How do we break this to the board? Yes, and this, this was real, and the other- slip like this, you know that. They just love to nail your nuts to your forehead. Don't sweat it. I just may have something more important than Premiers to tell them. You got something up your sleeve? I'm gonna buy the company. You're not serious. Watch me. There you go. Yeah. So on a, on a cigarette side, you saw the lawsuit people at the beginning. Try a list of the art dealers in Chicago. This was when it was all starting to hit, the massive multi-billion dollar lawsuit. Never mind. Call the plane. Tell them to send up Chicago. Yeah. We'll pick up Mrs. Johnson in Florida. So what company is he gonna buy? Then we get Jim Robinson in America. Right? No, no. His own company. Man- management buyout backed by private equity. Oh, oh, okay, his own company. Mrs. Johnson. Yeah, yeah, yeah. Yeah. Also, Charlie Hugel in Seoul at the Chosen Hotel. Marge has a number in Atlanta. You sure, Ross? It's that bad? Trust me, okay? We huffed and we puffed, we came up with a filtered insult. If I could, I'd burn every last one of them, except you can't even set fire to the fuckers. So you are gonna buy the company, is that what you're saying? It isn't the Premiers, Laura. I got no other choice. The stock just won't budge. Even though you're sure he'll take over? What are you talking about? The company. Henry Kravis. Who said anything about Henry Kravis? Robinson's residence Jim, is this a bad time? No, no, just dressing. Going to a charity do. So that is- What's happened? Fred Thompson, no? Yep, former US senator. Yep. Now deceased, Fred Dalton Thompson. That is a one tremendous stealth- Superman outfit really tremendous. But tomorrow's fine. Absolutely. Who's he play? Well, come ahead. Um, he plays the CEO of American Express. Okay. Who owned Shearson. Who of what? The investment, the investment bank. Yeah. Yeah. Okay. Kiss your good lady for me We have the- I certainly will investment bank coming on the scene now Linda? Yeah. Better move it, sweetie. Two seconds, Jim. God, I'm on my third can of hairspray. Jim Robinson. That was Ross. He's, uh, got a little project he wants some help with. Oh? He wants to, uh, buy out RJR Nabisco What? A low stock price is not the end of the world, Ross. I mean, buying the company is like shooting your arm off to get rid of a hangnail. Jim's not about to steer me wrong on this, Charlie, not as a friend and not as chairman of American Express. With their controlling interest in Shearson, he's gonna be looking over their shoulder the whole time. Are you okay? I can hardly hear you. I said there's no way you can pull this off without putting the company deep into debt. Are you ready to cut back on all the perks? Mm-hmm. All the planes, the- There it is apartment in New York, the house in Palm Beach. You really wanna turn your life around? Let me look this up. I think Charlie Hugel just died at like 100. I'm not doing this for my health first, Charlie. He's that one guy. Wow. The plane was either. Look, just leave all this to me. Try to have some fun over there. Get out of your room. Go enjoy Korea. Those mobile phones were like bricks back then. Yeah. And it was like $10 a minute kinda stuff, I think. Rachel, you guys come by and lunch me. Yeah. That was so- 2016 he passed away. So he- Oh, really? at almost 100 years old. Yeah. Are they there? 90. Okay. Two minutes, I'm on my way. Gotta run. Who takes a flip phone to their horseback riding? God rested on Sunday, Linda. She didn't make my salary. Kiss Henry for me. So much hairspray in her hair. It's a movie, but I know it hurts. This is the '80s. I know you, you were a toddler during this time, um, but that's what people looked like. I mean, I, I remember the early '90s, which was still kind of like how high can you get your hair? I'm sorry, Henry. I mean, nothing like that will ever happen again. Yeah. It, it was- Good ride? Great. Only got two coals. Ah, what you need is an unlisted horse. Yeah, the time of shoulder pads. But although that's back now actually, shoulder pads on suits for- Thank you It always comes back yep, it's all cyclical. Oh. As we've talked about in our book- You act almost alive in our podcast, everything's cyclical. Henry? Travis. He's just down the road. Big hunter, our Henry. Ooh, a hunter Range Rover Hey, tell me, tell me Well, Ross has agreed to let Shearson Lehman raise all the money he needs for the buyout. Oh, Ross, that is so super. It just seems right. You guys are like family. Did you call Peter? I'll call into him now. Peter? It seems right. Yeah. Uh, Peter Cohen. He runs Shearson for Jim. He is chomping at the bit to pull off a deal like this one. I mean, Peter is ready. Are you saying he's never done a buyout before? No. No, he's done one. Nothing this big, but the procedure's the same. I mean, first you lay out the terms that you're looking for for yourself in all this, and then you make the company's records available. Peter and his people go to work and come up with a proper bid for you to make. I mean, he can outline the whole deal probably when you're down in Palm Beach. Can he do it in three weeks? I'd love to spring this at the next board meeting. Don't see why not. Uh, Ross, could I pitch my firm to handle the PR for you, or am I being too piggy? I was saving that- Three-week deadline? Man, I'd hate to be the analyst working this deal from the ground level. Wow. The who, Shearson? Hello? So Fred Thompson is on his- Peter phone calling Peter. It's Peter Cancel your life for the next couple of weeks, fella. Peter is ahead of- Got a lot of work ahead of you is ahead of, uh, Shearson. I know. It's all gonna happen that fast? Yeah, the, the ba- the banker that's gonna run the deal. Okay. Fast and quiet. Confidentiality is critical. If this hits the press, you'll have a feeding frenzy on your hands. One word gets out about this company being for sale, and everybody and his brother's gonna try and buy it. Or everybody and his cousin And she's like, "I'll run the PR for this." So, so Kravitz, so Kolberg, Kravitz, Roberts, Kolberg was out of the picture already at this point, but Kravitz and Roberts are cousins. Oh. So that's where that joke was, everybody and his cousin- Oh 'cause it, Kravitz is like- Yeah is a cousin to, to, to, to Roberts. They're getting the investment bank lined up. They're getting the PR lined up. These are the oldest computers ever, but they were probably state of the art. And what they, but what they said was, was honest to God truth. You wanna move fast so that you can try to close out any other bidders if you're the buyer. Okay. You basically wanna ring-fence the deal and make it almost impossible for a competitive bid. Make the bid high enough so that, you know, it's not ridiculously high. All these people are working late, eating Chinese food, late hours, everyone's on their phone Corey might have pulled a few of these in the UK Is three weeks fast? Is that legit fast? So fast. For a $56 billion deal, yeah, that's pretty quick. Yeah. But it'll have a bunch of caveats in the term sheet. Yeah. I'm just gonna give you the broad strokes, okay? The whole deal, the actual document, is taller than my son. Tom? RJR Nabisco's shares are trading presently at 53 and an eighth. The highest they have ever been was in the neighborhood of 71. Which is where they really belong. Our proposal is, come Wednesday's board meeting, you make an offer to buy the company at $75 a share. 75? Jesus, that sounds high. It is high. That's the idea. It's gotta be attractive as hell. And still makes sense to us, of course. Well, how much would that come to? At 75 a share, how much would we need to raise? We'll be looking for $17 billion. Even today, that's still pretty, pretty sizable numbers. This is a lot of money. Exactly. We'll be throwing the kind of numbers at the board that no one else possibly can. In one shot, we're knocking out any and all conceivable competition. But at that price, with that kind of debt load, how long is it gonna be before your bean counters start trying to pare down the company expenses, telling me how many jets I can have- Oof and all that nickel nursing crap? Never. You run the company the way you want. You're talking total control? Uh-huh. Absolutely. We'd never expose our investors to that much risk if we didn't think your expertise wasn't gonna get it all back for them. Uh-huh. I'd have to grow an extra ass to work off the duet, I can tell you that. Using the 10K you gave us as the basis for your deal, this is what you personally stand to make over the next five years once you take over RJR Nabisco Are these figures for real? Could be even more. It's awfully rich, Ross, and it makes the deal much more difficult. I'm sure you wouldn't want to advertise those numbers to anyone, of course. I don't think a skywriter would have enough smoke for them all, do you? You're gonna do extremely well. So I don't think they discuss the actual mechanics of the deal, which I could get into at some other point, but it's, it was ridiculous. The management side of this was ridiculous. Yeah What was the 17 million? That's a personal rate. Billion. Billion. Billion. What is that taste? So wait, so what are they so explain it really fast. They're- What is that taste? What does this taste like? They're saying we're gonna put a deal together We're working on it. We're going to offer the existing shareholders $75 a share when it's currently trading at 53 and an eighth, I think it was. Did you know people in the company were- So pretty, pretty big premium to get them to sell. So- Okay. I'm fixing to, babe. I'm working on a deal in Florida to get you an honorary degree. Honest to God. Bet your ass. From now on, they're gonna have to start calling you Dr. Cupcake. Oh, you think he's coming down with something? Poor Rocco. You all right? Your dog has a monogram on your private jet. RJ1 bound So we're here Mr. G Shepherd is on board. We're ready to roll. RJ1 cleared for takeoff. How many jets is too many, guys? Give our best to Mr. Shepherd. One. One? Agreed, one. In Palos when I got there, it's five and we made those all go away. Yeah. Poor baby. You'll be a lot happier back in Florida So flying the dog on the corporate jet- He's flying the dog all by itself back to, back to the Florida house. Ooh, look at this workout machine. Heart of hearts- So bottom line, you, you really think Peter can pull this off, something this big? I don't even think if I was legitimately a billionaire I would even buy a private jet. Really? No. With my head on his shoulders- I might fly private fractionally, but certainly not buy my own damn jet I don't get it, but- Yeah you'd think Saul wouldn't be this relaxed. Not going through security at airports would be attractive. Right. Bobby. That I'm gonna pull off the biggest deal in history, and it's gonna kill Henry Kravitz to find out that everybody else on the street isn't just shit? Shit. What's wrong? I just realized what they taste like. What are you thinking? What am I thinking? I'm thinking my lapels are too wide, my hair's too long, I was born with the wrong fork in my mouth. But if all goes well tomorrow, this paper boy from Winnipeg is gonna own the 19th largest corporation in America. If I'm lucky, do I get to kiss your ring? Well, that's as good a place to start as any. Now, the deal that was on the table, management got 8.5% for $1, essentially. Johnny. Well, Johnny- And Ross Johnson would've had a billion dollars worth of equity at close up they arrived just as I was leaving, so it's gonna have to take. That's insane. Yeah, that can wait. Now, I got something really important to tell you. A billion. What, more important than proposing we sink $2.5 billion- For 1988 dollars into the bakery? Cookieville, that's a great name, Ross. Great name. It's also wasteful. It's completely unnecessary. A $10 million computer to bring the onion bits to the mixing dough when all you really need is one guy with a forklift to do it. I'm gonna let you boys work this one out. Good luck later, Ross. My money's on you. Thank you, Ed. Now, just cool it a minute, Johnny. Can I get you a drink? You want anything? No, I'm fine. I'm good. Good is cotton stockings next to great, John. I'm gonna make you rich. Well, you already have, Ross. No, you just think you are. All that changes today. Sit down, partner. Come on, sit down. Are you ready? Yeah. I'm going to buy out the company I had no idea Gonna wrap it up in a week, 10 days at the most And you're doing this with just Ed and three others from management? Right Why not everybody? Why didn't you include all of us? John, if this deal goes through, the debt load just might force a few divisions to go on the block. Now, obviously, I can't have partners owning the company with me who aren't even gonna be with the company, can I? You're not gonna sell off Nabisco? Well, I'd rather not if I don't have to My God, Ross, how can you do this? In, in one breath you're talking about expanding the company, and then in the next one you're talking about ditching it. Whatever happens, you're safe, John. I mean, after the incredible way you've run the food division, there's no question about whoever buys it is gonna keep you on. Uh, hey, if you're not happy with the new brass, with your severance deal, plus your what, uh, 50,000 shares in Nabisco, you could walk away with seven million bucks, maybe more. We're not talking just fuck you money, John boy, we're talking fuck everybody money Fuck everybody. Right, Ross. Fuck. Wish me luck I just pray you get it. I really do Thank you, John. I appreciate that. So he's the president of their food division- Food division and he has 50,000- And the other guy, the other guy, Don, is the president of the tobacco division. Exactly. Yeah. This guy has 50,000 shares. Despite our steady yearly- Yep So he would- profits, despite your management's best efforts to increase shareholder values. Now, after a great deal of study, after exploring every conceivable option, we feel that the best possible way, the only way, to, uh, recognize those values is through a leveraged buyout Well, that's awfully radical- What the hell is that? isn't it, Ross? The wolf isn't exactly at the door around here. I'm not pushing the panic button, Vernon. I'm simply offering it as the one option that best looks after our shareholders. You don't think the shares will get a big boost once we start selling premiers? Well, that's still a crapshoot. I'm talking about a bird in the hand. I'm talking about putting a mountain of money into everybody's pocket right now. You believe what you have in mind is doable? Absolutely, and at a figure much higher than the stock is selling for today. What stage are you at? How, how far along has this gone? I can only tell you that if the board gives us a green light, we would be in a position to wrap it up very quickly. I'd say in a matter of days. We'd wanna be sure the number you're thinking about is not frivolous. You'll have to define frivolous for me, Mr. Chairman. Well, I'd say your offer has to be north of the highest price this company's ever traded at. Would you say that $75 a share meets that geographic requirement? Well, I suggest you and your group leave the room, Ross, so the board can discuss your proposal. Thank you, Mr. Chairman. You're welcome. Thank you all, and happy reading. The board has to approve it. So Vernon, the one that they talked about there is Vernon Jordan, who served as an advisor to President Clinton- That was a good job, buddy after this. Really? Oh. Keep everything crossed. Vernon, yeah. Okay, I remember that name. Yeah. Mr. Ross, perfect. Yes. You're not nervous, are you? Hell no. I always take a leak with my fly closed. The LBO, according to the company's official release, would be the largest takeover in corporate history. In a surprise move, the company's chief executive officer, F. Ross Johnson, today offered his stockholders- Excuse me, sir. Let me get by $17.6 billion for their shares of RJR Nabisco- Get out! suppliers of such famous products as Oreos- Ed Gordon Camel, Winstons, and Salems. $17 billion, now that's cigarette money. Yeah, Charlie threw me a real curve putting out that goddamn press release so fast. I mean, how the hell could Peter Cohen not have anticipated it? $17 billion, for Christ's sake. It's like trying to sweep a ton of elephant shit under the carpet. As I said earlier, we are at the corporate headquarters- Can't believe we're off to this kind of start of Ransom Munitions- Have you talked to Jim? You're damn right I have. His ass is on the line, too. If Shearson blows this, he has his own board to answer to. As I said earlier, we are at the corporate headquarters- Oh, my God of RJR Nabisco. What? Is your TV on? Senator, you're no Jack Kennedy. Which Jack? The all important board- Four. That was really uncalled for, Senator. As I said earlier, we are at- Holy shit the corporate headquarters of RJR Nabisco. The all important board meeting is happening right now as we speak. A helic- Yeah a news helicopter's outside his window. Well, that's a Now it'd be a drone for us kids Now on our bucket list, can we get a news helicopter come into our window? Yeah. We've done something. Not, not my windows. They're far too low. Who's this guy? That's George Roberts Henry the other half of Colbert Roberts Come in, George. It's a R in KKR. Yeah. It is a R. The cousin. Uh-huh Seventy-five a share. Do you believe that Gall is trying to steal the company? They're going for a slam dunk Try and pull it off before anyone else can come up with another bid I was the one who gave Johnson the idea for a buyout in the first place. Laid it all out for him I mean, there has to be some minimal appreciation on the man's part for how the system works Some respect for the rules. First time in the jungle, I guess. Points for innocence. He got the art of the double cross down real fast And of all the people in the world, why Peter Cohen? Shearson has no real experience with leveraged buyouts. Sure as hell don't start with the biggest one ever Ja. Altså Jim, I figure Word is Johnson's hired Linda to do his PR. Is that a fact or just a rumor? Rumor is just a premature fact, Henry. Linda. It just doesn't make sense you didn't sew up the deal before you disclosed it. I mean, why'd you leave us all so vulnerable? Isn't anybody listening? I didn't disclose it. Charlie Hugel sprung that press release all on his own. Ross thinks you should have anticipated it, and frankly, so do I. No offense, but I'm not running the PR on this deal, am I? Is that really- Charlie is advertising. He's fishing, hoping somebody will come in and top Ross's offer. Never. Which is what he needs to do. Nobody else is gonna step up with a higher number. Yeah. Nobody- You sure? And as, as a fiduciary- wants to. You know what? If I- you have to try and get the highest value for your shareholders Ross will behave. Yeah. You got a picture of Henry allowing Ross total control of the company? Trust me, in a week- In a public company this is a done deal. Mrs. Robinson on line two. Linda Henry You just floored us with this RJR thing. Are you aware that we gave that idea to Johnson in the first place? Now, we're not gonna sit this one out on the sidelines. You understand that? I, I do, Henry. I want you to make that very clear to everyone, and I want to hear back as soon as today. He's pissed. Hmm. Yep. He said he's not gonna sit on the sidelines. He only has to sit there a few more days. He said he's the one that gave Ross the idea for the leveraged buyout. And Ross decided to go with us, so? LBOs are his game, Peter. He invented them, and it's clear he doesn't want you playing in his sandbox. I'll make a note to be scared. Come on, will you? What can he do about it? Well, why don't you meet with him and find out? Why don't I find out and then meet with him? Henry is not a man you stonewall, not Henry Kravis, not KKR. You're gonna need to raise a lot of money, Peter. What does that mean? Henry could be very helpful. I'm not even in the water yet, and you're calling for a lifeguard? You're gonna have to meet with him, Peter. At worst, it's simply good politics. Linda? Ross is up from Atlanta. My guess is he flew up under his own steam. See you later, Jim. And remember this, all these guys are connected. Wall Street's small- Yeah private equity's small- Why the hell does anyone have to meet Kravis? the universe is small, a lot smaller then than it is now. He's the best. That's all there is to it. Come on. These guys are all, they all know each other. What does any of this have to do with Henry Kravis? KKR really- A million people talk to me about doing an LBO come up with LBOs. So he was the first. No. I'm not supposed to send Thomas Edison- But they really- every time I turn a light on? Made him into a process. Send the process. Yeah, like a replicatable process. I mean, Henry Kravis isn't the pope, for Christ's sake, or did he buy up all the shares in the Vatican, too? We have to gauge his position- see if he's gonna stay out of it, or if there's some way he can be a part of this that can be to our mutual advantage. Then I'm the one to talk to him. Better for Peter to do it. He and Henry speak the same language. Hell, I speak bullshit. I picked it up my first day in New York. Ross, trust me Hi, Henry You will quickly figure out who ends up being the- I'm trying to stay alive issues as portrayed by this movie. What? Aren't they really better off to dinner? I'd be very surprised if you ended up buying RJR Nabisco at seventy-five, Peter. Why is that? We've been looking at this company for a long time. Seventy-five is cheap, very cheap. It's what Ross wants. We're just setting up the financing for him. And what's Shearson getting out of it? A normal payoff, nothing special. What does that mean? Five, ten, fifteen, thirty percent of the company? What? In that range. And what's Johnson's deal? Also somewhere between zero and a hundred percent? How much of the company will he own? Obviously, those figures are confidential We have to be in on this, Peter. You understand? I didn't give this idea to Johnson just so he could send me an up yours card. Maybe there's some way we can work this out Work it out how? Well, there are a couple of options. We can compete. That would drive the price up and make the debt so high nobody could afford to win. Or you could sell us Ross's food business- Foreshadowing and take tobacco for yourself. We're not looking for partners. Well, in that case, you could just step aside. What, are you kidding me? You want us to step aside after all we've done on this? Oh, we'd honor that, of course. We'd pay you a fee for your services to date, say 125 million, plus an option to buy a 10% stake in the company. Are you serious? I don't believe this. You're offering me a fucking bribe? That's an offensive word, Peter. Offensive and untrue. You're offering me $125 million to take a cab, and I'm offensive? We're just offering a variety of options, Peter. Well, you can stick that one up a variety of asses, okay? And stop trying a good cop, bad cop- routine with us around here. Look, one way or another, we're gonna win. It's very interesting. Yeah, very interesting portrayal here disappear. Is this accurate? Or the- or is this dramatized? You can just decide whichever way you think is best. Or these people really like this? And we'll go from there. And both. I doubt it. I'll be in touch. I feel like they're certainly playing into the PE stereotype of emotionless, sort of just- Before the board meets tacticians that are- Which will be, of course- You know they can Of home turf you know, bloodthirsty. Um, and, you know, playing into the bankers being bankers, you know? Yeah. Deal guys, salespeople, basically. Get a quick answer from the board. We are- You know, not necessarily the highest intellectuals running short on time. Well, and the other part is you're seeing the ego at play now. Mm. Yes, sir. Ego. Yeah, that's one thing that's portrayed very well here. Man, it's not wink, though. And is, uh, very true to life. Maybach So far, Jonathan Pryce in, in his, his, uh, characterization of the role is my favorite of all of them. Charlie. It, it's just, it's spot on. It's Roy. It just came over the wire. Henry's made a tender offer to buy RJR Nabisco. Damn. How much? $90 a share. 90? Mine owe- $20 billion Jesus. Well, somebody pissed somebody off. I don't know what happened in that meeting, Jim, but somebody put their finger up somebody's ass, or Kravis wouldn't be dropping this bomb on us. Peter Cohen just sticks to raising money from now on. Is that understood? First a press release, now this goddamn Kravis offer. Do you know how much more this deal is gonna cost now? Yeah, I mean- Do you have any idea how crazy this fucker's gonna go? the Shearson and Ameritrade are, that's, that's about the fact here. I want you to sell enough of my IBM to get me enough bread to buy 1,000 shares of... That's right, 1,000 shares of RJR. Now, Beskoff- Good subtitles. Yeah. Move along, please. Now- They're not misspelling anything at all which is like what KKR just did. And the company that's for sale has to answer it within 10 days. That's what the law says. Which means Mr. Johnson's bid is kind of like on hold, 'cause someone else has stuck their foot in the door. Now, Mr. Johnson has to top what KKR has come up with. Plus which, of course, and they could turn around and top Mr. Johnson all over again. Oh, your husband's got one fight on his hands, what can I tell you? They do a good job in this of, like, explaining these concepts- Yeah to the layperson. Like- Honey it, this is an entertaining movie to anybody that's got, you know- Yeah just looks for intrigue. That you don't have to be a pr- professional pick- Come on, Rudy like- Rudy You also have to take the mansion No, you can probably see why this is one of my faves. And I watched it- Yeah, it's awesome it came out in '93, so I was, you know, a young 22-year-old. Yeah. Yeah. Coming fresh out of college. Yeah. And I was like, "This is awesome. I could do this." And then I did. You wonder what deals people make movies of or, you know- But they all like you films of in the future, you know? Like- Use my cigarettes that are happening now. Yeah. To the driver. Anybody in this crowd not worth nine figures? That's an interesting tie choice. He's, is he... He's a cowboy, yeah. Oh, my goodness Conner, you are a man of mystery Now we'll get into some of the other folks Guys, anything but Christensen wearing jeans. Who else could get $20 billion out of Washington? Yeah. We'll get to a bunch of the other folks that, whose names you'll probably recognize, or you may recognize. And come on, Conner. Yeah. I don't want to say that. $20 billion, just one billion more than 19 is all it is. You want a little idea of what $20 billion could get you these days? How about you could retire 1% of our national debt, or you could buy your own B-1 bomber. That'd be a first on the block, right? Now, I guess if you- wanted to be a sport, you could also buy each of the homeless as well as every single person on the planet a Big Mac, an order of fries, and a Coke. You could buy 80 million vowels on Wheel of Fortune. Or this would be only a start, of course. You could send Dan Quayle to University of Indiana Law School for 6.8 million years. All right, Conner. How do you spell potato? Oh, you know that one. Go down there Yep. Have seat in here They're gone Well Made today. Henry. Darling, this is Ross Johnson. He came to dinner some time ago. My wife- Lori Darling, that was the name of our first jumper. A jumper's a horse, isn't it? Get the picture? What you been up to, neighbor? Word's out you've been poking around for a little action. Just trying to keep you honest, Jim. Peter Wilson, that's Tom Hanks' wife. I think it'd be a good idea if you and I had a talk, Henry. You know where to find me, Ross. When you get her back home, make your mind. Dance up to the middle and then- There was no need to escalate things by making that offer, you know? You never gave me a chance to get back to you. I said I was gonna call, and I would have One of us better cut in. All we need is for Peter to throw some fresh shit on the fan Have you ever been to an actual, like, hoedown like this? I believe in a person who does what he says he's going to do I don't know if this actually happened Yeah, this is Ross Oh, God Teddy Forsman, Forsman Little. Oh, nice to see you. Dad My wife, Lauren. Oh, wow. Okay. Sorry I'm late. This is Tiffany Ford. Well, howdy, ma'am. I guess the dress up worked out. You must be the new schoolmarm. You know, I'd love to talk to you, Ross. He's a nice person. Any chance of our getting together? I'll save you the next dance. Well, what I wanted to talk to you about was the... Wall Street. Perfect. You got the hots for her, he's got the hots for you. I wanna see Rory do like a fancy dance move. That's too silly. Oh, my gosh. Please. It'd be taking me back to junior high when we had to square dance in class in PE. Cowboy hat. Literally what we did. Yeah. Belt buckle Dave, go get yourself some chow Goodness Ross, it's Phil Woodfield, First Boston Group. So I think we can help you with your deal by, uh, taking advantage of certain tax loopholes you may not be aware of. Give me a call, okay? Ross. Hang on a sec. This is, this is what it's like when you've got term sheet coming in. Yeah. And the private equity guys are all kind of going, "We want our figure and a pie on the deal." Yeah, yeah. Broken management. They're all coming out of the woodwork, yeah. Are they trying to get in on the deal? Yep. Yes. Okay. Some- do something to extract fees from the deal, exactly. That's what I'd say. When you got that much in fees sitting there on that size deal, you want in. Well, if you guys can take a fist and a compliment at the same time, I'd just like to say that was a whale of an offer you came up with today. $90 a share is a great tribute to the way I run the company. Oh, you've done a tremendous job. You'll understand if I don't shake your hand right now I don't know what happened between you guys and Peter Cohen, but from now on, I do all the talking. Seems to me you and I did talk once, Ross. At least I remember our conversation, every word of it. Look, Henry, no matter where the idea came from, the last thing I'm rooting for right now is a bidding war, so why don't we sit down and try to hold this to a mere $20 billion deal? What do you say? Makes a whole lot of sense, Ross. If we can figure out how to be on the same side, all I need to know about is you guys aren't gonna get on my back about cutting down on planes and golf courses. Yeah. Well- That's not what's important to us Probably. Yeah. This is- You mind if I add an extra plane ride or two? Just space shuttles are out, right? It might be a lot cheaper. What's IGR up to now? 10 corporate jets, 26 full-time pilots. Where does that hangar you built in Atlanta cost your stockholders $12 million? Those stockholders have a management group that brings in a steady billion a year in profits. I see nothing wrong in giving them whatever it takes to make their job easier. Anyway, what the hell? A few million dollars lost in the sands of time, I always say. So- Yeah, and don't say what the private equity. That sounds like- So why does Ross not want a bidding war? You got it. And- Because he's trying to buy it, so the price keeps going up. Yeah. Yeah. And as the price goes up, you need to be able to finance it- Hey, Rossy which means you need all the free cash flow to pay for it, which means you gotta cut any extraneous expenses out. This was a good talk. Exactly. I do well in toilets. Well said. I do well in toilets. How many deals are done in men's bathrooms? More than you'd, more than you'd think. Debt, debt really, really does, just to hammer that point home, it really does fix your- Except his own. They, we're- your financial plan in a way. It, that's the, that's the seat function. So y- you have to be able to service the debt, and otherwise you're gonna hand the keys over at some point. So- It's all junk bond crap you know, you can either grow your way out of it, or you can reduce costs, and you have to have enough cash to service the debt no, it's not personal. My focus is not on that goddamn mega maniac. What's this guy mad about? You know what kills me, is that these quick buck artists- Pretty personal. He's, he's Forsman Little guy they don't give a rat's ass about the companies they buy. Okay, hey. No, I've said this in the Wall Street Journal. All they want is their steady flow of these outrageous fees. They couldn't care less if they're gonna throw the whole country into a depression. Let me tell you about Forsman Little. At Forsman Little, what you get is reality. My brother and I are real people, real people with real money. All right, we'll talk. All right? I gotta use that. He would get, he would get canceled if he worked today Hey, forget KKR. Forget Rexall Burnham. In the last five years, Forsman Little has turned around and sold- Rexall the companies we bought for up to 10 times more than we paid for them. Okay, we'll talk. Well, how about tomorrow? You got it. Okay. Listen, everybody's gonna try to promote you, Ross. I just, I wanna make sure you're going with the best. You're right. Ross- Give him the stall just to get away from him Wally Knapp. I'm with Drexel Burnham Classic Come over the stall wall, give him a hug Drexel Burnham Man Does that ring a bell to you, Emily? Oh, yeah. What? Drexel Burnham. She eats like a bird. Drexel Burnham Lambert. Does that ring a bell? No. Yeah. No, they all do. No? I think they have a weight clause in their prenuptial agreement. Junk Bond- What's going on back there? Mike Milken Ask a real question Mike Milken, Junk Bond King ended up going to jail. Yeah. Insider trading, the whole nine yards. Okay. He had to be humping the sleeve of his suit, Marv. Well, he had on a Davy Crockett hat. Thought you were gonna pop the ribs today. Yes, he did. You don't understand me, do you? Mountaineer. Boy meets girls, friction born. That's mine. Mm-hmm. Does she mind if I- But that's how aggressive they are Yeah They just eat you up. Yeah. Follow you into the stall bathroom I think this is a little over the top, but it's, it's- Prove a point though. Like, that's what they do directionally correct. Yeah. Oh, man. You know her one big treat every day? Caroline's. Her fix, she calls it. A glass of milk and one Oreo. Just one? We'll never get rich that way. Rich? I like the way the dog gets to sleep on the bed We got it in the Metropolitan Museum for $3 million. Any dog of mine sleeps on the bed. Yeah. No wonder he can't afford more than one Oreo. Harder. Any second now. She's his second wife. It takes one to know one. He must be crazy about her. He put up $3 million just so Caroline could open her own fashion house. Can you imagine? Didn't I bring you a dozen golf balls last week? That he did. So it's the one time for the purchase It's a habit. I do. This is a good movie. I like the dialogue. It's hilarious. Lucky you to play on when nobody's on the green. You know what happened after he bought out the Safeway chain? Thousands of employees got laid off, thousands. People who'd had their jobs forever. Adele, my leg waxer, one of her cousins was one of the guys who got fired. 18 years he drove a truck for them, Ross, 18 years. It happens, babe. It happens. Parked the truck one last time, he went home, and he shot himself. Hmm. There are no forgetting it happens Come on, let's all just take a beat and get real about everything, okay? The scenario that makes the most sense is for us to join forces and fall in with Henry Kravis. That way the board only has to consider a $90 share, which we all know they'd snap up in a second. If we try to outbid each other, no matter who wins, the company will be impossible to manage because the debt load will just be crushing. Do you have a problem with that, Peter? You're the boss, but if we need a higher bid, I can restructure the financing. There's other money around. Henry's not the only one with resources in this town. Is this your business sense talking, Peter, or am I getting an earful of your ego? Listen, Ross, I don't mind insults. Just hold it Yeah? Mr. Forstman is here to see you. Now? Give him a room. Ask him to wait. I can hold my own with the best of them, but nobody, nobody ever asked me to take a bribe before. Oh, Travis was not asking you to take a bribe. That is not his style. What you're really saying is you just can't be partners with him, isn't that it? There's no such thing as being partners with Henry. We will do business with whoever you say, Ross. Now, if you want us to take his offer to step aside, all you gotta do is say the word. Am I right, Peter? Ed, I think you and I should have a little powwow. You guys just stay here, use the can, whatever. Just give us a minute Investment banker guy I told you step aside because they're gonna do the KKR deal Yeah. Well, yeah, and he'd get paid $125 million. Yeah. Tough call. Not the way I look at it. Were you serious about letting Ross dump us? I had to give him the option, Peter. I'm counting on his knowing where his best interests lie. And they got the Forstman Little guys hiding out in some crappy conference room I say you go home with the guy who brought you With Premier cigarettes I say we win with Shearson or we go out with Shearson. Kravis will eat you alive if you let him in, you know that. Not if I can sell him on letting me keep control of the company. I just can't see you going in with him Uh-huh. That's not gonna happen Yikes That is not gonna happen Ed, KKR is a force to be reckoned with. Our team's been running around like a bunch of water boys with a leaky bucket. As soon as, as soon as he asked about the Jets, that was over That was over. Yes, Jill? Mr. Kravis and Mr. Roberts are at reception, and Mr. Hugel's on line one. Uh, Mr. Horgan will take Kravis and Roberts to the conference room. Ask Mr. Hugel if I c- no, wait. Uh, okay, I'll talk to him. Uh, hold it. Ed, don't let Kravis get anywhere near Forstman. I don't want any blood on the carpets. Charlie, what's on your mind, pal? It's a matter of some importance, Ross. A good deal of importance, I would say. When do you leave town? Tomorrow afternoon. Buy me breakfast tomorrow? There we go. They're gonna, they're gonna realize how shitty a product that is With the batch. Oh, it was with the batch The PE guys are shoved in this little conference room Jesus They want it on the deal Will you come this way? KKR is now in the building So yeah, KKR, Forstman Little, and Shearson, American Express all in a building Oh, man Well, you can, you can, uh, you can, you can, uh, con- consider that they've conducted some product level due diligence before they got involved All right, we're going to the main conference room. Oh, whoopsies. There's Shearson Peter. Henry. George. Jim Ross thinks we should all talk Sure glad you guys don't make cigars Smoke bothers you? Only if I'm in the same city with it. Fucking beautiful. Buy a tobacco company. It ain't about the, ain't about the product. Ross, thank you for the part. It's about the cash flow. Hi, I'm Don Ross. Bill Woodfield, first boss- Amen I'll be back First boss Teddy Yet another set of bankers Mario, how you doing? It's okay. It's okay- Yep no problem. Ross, this is my brother, Nick. How are you? Great pleasure. Now, we've worked up some ideas for financing based on, like I told you, real money with real people, and not the kind of phony crap- Teddy this womp-womp- Teddy this funny money- Teddy, I gotta level with you. I'm meeting with Henry Kravis. Oh, geez. See, I, I think it would be a great- Henry Kravvy idea if you did that, Ross. Subtitles. There's no if I'm going to do it. I'm doing it. He's in the office right now. Now? Now. You're meeting with Kravis now? That's why we've been sitting around waiting, killing time, choking on those new shit cigarettes? Where did you get a Premier? Oh. There were some in the other office. Nobody's supposed to smoke those. I don't think that'll be a problem. We're still in development. I sure as hell hope so. Look, look, could you guys please just wait a little while? Uh, uh, this thing with Henry might not work out at all. Ross, don't you see this is our last chance? The bastards are at the city gates. Let's stand at the bridge together. Let's stand at the bridge and push the barbarians back. Ross- This is great. This is great. I, I gotta say, I love the charisma here Henry, thank you for coming. Ross. George. Ross. Hope you don't mind meeting in a conference room. All the men's johns are full. Now, the way I see it, we're down to keep-it-simple time. What really makes the most sense all the way around is for us to do this buyout together at the $90 a share you guys have proposed. The way Peter structured it, my management group would own 20% of the company. Am I right, Peter? In that area, yeah. Uh, we'd want to review that arrangement. It seems awfully generous. Uh, whatever it winds up, I'm suggesting that everything else gets split 50/50 between you and Shearson. In addition to our customary 1% for our services. $200 million. You might wanna reconsider that amount, Henry. A lot of people are watching this process, including Congress. Well, we certainly wouldn't wanna do anything to hurt the business we've grown to love and admire. Now, is that it then? Basically, those terms being acceptable, have we got ourselves a deal here? Yes. We want Drexel Burnham to sell the bonds on this one. Instead of Shearson? They're what a deal this size needs. They won't affect your share, they work cheap, and they're the best. They're also about to go before a grand jury because of their Milken-Boesky connection. Just what we need- Mm-hmm. Yep stationery from Alcatraz. Uh, maybe you ought to think about that one, Henry. We have thought about it, Ross. With or without you, we're going for this company. We're going for RJR Nabisco, and Drexel's doing it for us. Are you firm on that? Is that a deal breaker? It is. That, and one last point. Why are we putzing around here? Johnson put this company in play. I don't need his permission to go for it. Just give it a few more minutes. Man, if he doesn't need me, I sure as hell don't need him. What did KKR say? Didn't Don Kelly tell me you let him run his own company? Here you go. And you do remember our conversation that evening? Don runs a very tight ship. There's no extravagance there. Don's got no air force, no Team Nabisco that must cost the shareholders millions every year. We'd require a lot more discipline. We'd have to agree on how you would run the company. Which is French for how you'd run me. However you want to put it. Mm. What you're looking for is a hand puppet, Henry. If I said yes, you'd have yours up my ass all the way to your elbow. And there's no way the banks are gonna let Drexel in either. Everybody's firm on this? That's it. We'll make our own bid. Now let's get out of here before I throw up from being in the same building as Kravis KKR wants Drexel to do the deal KKR wants, uh, Drexel to basically issue the debt, sell the bonds Sell the bonds to raise the, the tons of money on top of the equity capital Prick probably hates cookies too. Fuck 'em. They'll get theirs one day. Hold the door. Uh-oh. They're both in the elevator. Probably a lot sooner- Yep. Yeah uh-oh Betty Forsman and KKR I just want my position as chairman of the company completely clear, Ross. Obviously, you're gonna have to go higher than 90 a share, and so is Henry Kravitz. The highest bid is gonna win, Ross. Let's just put the price of shares aside for a minute, okay? Let's just screw all that. You know the only number that means anything at all to me? 140,000. You know what that is, Charlie? That's the exact number of people who bake and pack and ship and truck for us. And the more this company winds up costing whoever winds up buying it, the more those people are gonna get the ax. That's all that's on my mind right now. None of this macho bullshit that's got everybody slamming their dicks on the table. All I care about is making a killing for our shareholders without killing any of the people who, who punch in for us day after day, year after year, people who think of this company as a home Go your best shot then. I'm announcing that final offers must be submitted by 5:00 PM at the next board meeting, 11 days from now. I'll be ready. Ready for bear. I never thought you'd be anything less. Chairman of the board sets a deadline. Yep KKR has basically said Imagine being an existing shareholder on something like this, you know, where you got a nice position bumping along all of a sudden you just got the appreciation of your shares going up ridiculously. You're like Well, the other piece, this is, this is fairly typical. You get your indications of interest or your preliminary term sheets, and then you narrow it down to a couple- Yeah and then go final bids are due. The banker is normally running this process. Yeah. Here it's the board. It's a public company. But the banker would normally run that process and be taking in the term sheets from all the private equity folks doing the analysis of the terms to come up with... And, and you'll see this come up here, to come up with a full analysis of kind of where's the best deal. Yeah. 'Cause it may not be the headline. Yeah. Nothing Poor darling, I wish I could cheer you up. Pity we're not in the country. You could go out and shoot something They're absolutely stonewalling us, you know? There's no way for George and me to arrive at a realistic offer for the company without knowing its true value. And the law says Johnson's people have to cooperate with would-be buyers, have to tell us all they know about the company's assets, about their liabilities, where it's healthy, where it's not. Now, whether it's out of fear or loyalty or acting on Johnson's orders, I don't know, but not one of them will tell us a thing. We've got less than a week to make an offer. We're flying totally blind Do you honest and truly need Nabisco, Henry? Aren't there any other companies that'd make you just as happy? It's not the company, it's the credibility. You go. My credibility. Mm. Yep. I can't just sit on the bench and let other people play the game Not my game. Not with their rules. So, Coach, what are you gonna do? I don't know I just don't know Ja, George You're not serious We've got ourselves a deep throat. He knows where all the num- He wants to talk to us, Henry. He wants to be our friend. Hmm. Hold it. Quick, put on channel four. They're called smokeless cigarettes, and they're about to come on the market, but they've already come under sharp attack. Today, three health groups said they should be classed not as cigarettes, but as a drug, subject to regulation by the Food and Drug Administration. NBC's Mike That's a big hit Jesse will sample the reaction Nothing. Nothing. Zero. It's like smoking blackboard chalk. Really, it's, it's delightful. Wow. Newspaper. Another first for American technology. No wonder the Japanese are trembling. Jesus, just what I need right now. Total strangers sticking pins into Ross Johnson dolls, and in prime time. Are they as bad as I said? Premiers? I'll level with you. When they were being tested, some people suggested we roll them in toilet paper. Millions of dollars to develop, all those zeros right down the crapper. You're entitled. God, year in, year out, that's the kind of money he makes for the company. People take winning for granted, sweetheart. You lose a few bucks for them, they start looking at you like a virgin at an Aztec sacrifice. Premiers. Perfect name, I thought. Titanics would've been a better one. Who the hell do you suppose got NBC to do that story? Some people are always looking for bad news, Ross. Who told them Premiers were bad news? Jesus, what a town. If you didn't have such tall buildings around here, you'd be up to your ass in vultures. Ross, Peter would like us to try to raise our bid to $110 a share. Is that remotely feasible? Well, he thinks so. I mean, he's sure that Henry could never go that high. He's got such little information to go by. Breaks your heart for poor Henry, doesn't it? 110 means we'll have to raise substantially more money from the investors and the banks. It would help tremendously if you'd cut back on your share, Ross. Mm. Yep, here we go. I mean, it would help tremendously. Is Shearson going to cut back, too? Are you guys gonna take less? Frankly, we don't have as good a deal as you have, Ross. I don't know that anybody ever has. If your numbers were to get out as they stand right now, you'd probably get a lot of flak about it. Especially from the board. For sure. Why would they ever get out? Well, where did that Premier story come from tonight? This town worships success. What it roots for is failure. Everybody else's, of course. And I just don't think you ought to provide those types with any kind of ammunition. Fine. Fine. Reduce my share to whatever. I don't care. Money is the last thing I'm interested in in this deal. Mm-hmm. You may think I'm kidding you, but that's the truth. No, he actually is more interested in the jets- Yeah and the lifestyle. Yeah. I actually believe that was true. Yeah. Okay. Make a move right now, baby. The reduce my share, get the deal done. Let me keep my jets and looking cool. Yeah. I mean, you already walked that. Make a move right now, baby. 'Cause even at 90 bucks a share, there's no way they could maintain the same level of ridiculousness. So many times. He just hasn't connected all those dots yet Little fashion show action Oh, yeah Oh, is this the fashion line that the KKR guy gave $3 million to his wife to do? Yeah, so this is, we've got the, uh- AKR guys, the KMR AKR guy, his w- this is his wife's fashion show. Yeah. Now watch. He's there watching, but watch what's about to transpire. Okay, backstage at the fashion show The weirdest booby shot's coming Jamal Jamal, the president of Nabisco President Nabisco giving KKR, giving KKR all the info Yep. This guy feel like he's, uh, you know, he's being screwed basically. So, you know What you've got now is a competing management team, essentially Yeah That's not bifurcated, and it's Gloria and I have worked through that already Indeed So why was he in cahoots with KKR? 'Cause he was disgruntled Are you sure? I saw the boss. I was there. Well, I think he, he, not only that, but he was like, look, this is, he's right from the beginning- Better read. Why would Johnny stab me in the back? I treated him like a son. What better reason than you? he's been like, "You're overspending. This is ridiculous. This is stupid." And- Being top reader is bound to affect our bid, doesn't it? Or while I'm meeting him at the... Yeah. He's lost confidence in Johnson's ability to get it done. Of course no decision without you Ross, you know you can trust me. Driver, this traffic is impossible. Ross, you know what? I'll, I'll call you from Peter's. Keep me posted. I gotta run. Doing these big deals and this poor homeless guy is washing windows for like- I gotta get out of this town a few bucks. New York City. Man. Ross? I never enjoyed living in New York City. Darling, I think you better see this. I enjoy visiting New York City, though. That's fun. My entire deal with Shearson all over the goddamn place. I've only been there a handful of times actually, but, uh, one of those times was with Ed. We did a, we did a nice little- Not here winter carriage ride in Central Park. Hello? Hello? Through Central Park with, uh, with our pri- with our private equity director. That's right. How romantic. It was great. It was great. I'm afraid he can't be reached for a few hours. What time does Mr. Huggles' flight- Jesus, this is making me look like the greediest son of a bitch in the world. Shh. Is that your number, operator, or Mr. Huggles in Moscow? Story's probably a fucking profit, too. Thanks. Get me Peter Cohen. Hello? It's Peter Cohen. You're goddamn right it is. Peter, what is our private, confidential, top secret, for-your-eyes-only arrangement doing all over the New York fucking Times? Who leaked the goddamn thing? I've got Jim on, Ross. We're on a conference call. Jim? Ross? Ross is on, Jim. Not now, Harry. Who the hell's Harry? No, no, it's just me. We're on top of this thing, Ross. We're checking it out right now. Can you imagine the effect of this on the board? We hit them with our new bid, they'll forget all about it, I promise you. The new bid being what? We think we can offer 112 a share. 112, are you serious? If we can work out all the details. We've gotta prove what we're proposing makes sense. What do you mean, if you can work 'em out? We have to make the offer tomorrow. We can do it, Ross. Can't we, Peter? I'm sure we can, it's just the number's so stratospheric. We've got an awful lot of- You know what kind of an operator this makes me look like to Charlie? Sir, it's a Mr. Hugels. Oh, boy. Tell him I'll call him back. I'm talking to Ross Johnson. What? Uh, nothing. Somebody just said Ross Johnson, I heard him. Jesus, is somebody bugging my calls now? What the hell's going on? First home broke on, now the New York Times. You don't think I'm being crucified? And Henry Kravis just might own the nail concession. I hate to think that, Ross. My own feeling is that there are just so many people involved in the backside of this deal- The, the only thing this is reminding me is, um, you know, when we talk about it in our book, is time kills deals that nobody can be completely sure about anything. The longer stuff hangs out there without resolution- I have been blinded the more shit can go wrong and throw it off track I'm standing in a shit storm called George Reston. This is a prime example of that. He was got a goddamn umbrella They are guys. No, everybody's getting ready for the board meeting- Yeah 'cause they gotta present their offers. Oh, man Much different than the board meetings we all used to have, right? I remember going to the grocery store to make sure I had enough like, you know, snack for everybody, uh, beforehand, after I was putting the final, final touches on the financial forecast and the decks. The gummy bears. You weren't getting dressed by your butler? Yeah Funny as hell You've put us in a terrible position, Ross. The board hasn't stopped calling me. You've made us look like fools for not knowing about this agreement. Even bigger fools if we did. Charlie- Two and a half billion dollars for your management group. That's what your 20% share of the company stands to earn for you in the next five years. Two and a half billion dollars, Ross. That boggles the mind. Charlie, those are purely hypothetical numbers blown way the hell out of all proportion, but if they stick in somebody's craw, fine, fuck 'em, forget 'em. I'll just take whatever the board thinks I'm worth. Hell, Charlie, all I am is a salesman. You know that. I've been one door to door, house to house, company to company all my life. A salesman's biggest commission isn't measured in bucks. Every sale we poor- Yeah bastards ring up is a validation of who we are. People buy you when they buy what you're selling. There's just one hitch. A salesman needs product, Charlie, product. I'm not looking to buy this company because my business is buying companies. I need this company to make things and wrap 'em in shiny packages. I'm not one of this bunch that only cares about buying up places where things get made. Charlie, this crazy deal heat everywhere is burning all our bridges. We're piling up mountains and mountains of debt. We're borrowing our damn fool brains out, and just because we have gone crazy doesn't mean the rest of the world has. This country is turning companies into commodities, and the Japanese have got their fetuses working nights turning out computer chips Final bids are due in the boardroom at five o'clock, not one minute later Man, scrambling for bids. Always, uh Uh, it turns out Always stressful your opinion of me means an awful lot in my life, Chuck We're down to the numbers now, Ross. That's all that matters now Oof I'll do that You just got Now I know what the F in F. Ross Johnson stands for What, Eva? Nice to see you Right. Ooh, getting the cold shoulder from people. Yeah, because he's- Hello, Barry the deal, he personally stood to make a billion dollars, I quote, which is what he was part of the- Can't take any more time, Rob. Wilson, Charlie Smith, Homer. And they're just mad at him for making so much? I don't care. You gotta get the hell over here. What's wrong? Peter's office is still fucking- No around with our numbers. What? There are a million details, Ross. They're still at your office? They're just leaving. Jesus, that's all the way downtown. Don't pay attention, Joe. I got a whole boardroom full of... People just love me to get a half second late. I don't care. What- Give me that Bob. Remember, email did not exist in this, uh, time so- Get over here right now. Do you hear me? What are we gonna do? Yeah, 'cause it, it would literally be dropping off paper. Every, every one of these deals, or I should say every one of these deals we've done, it's all been, the bids are emailed in. Yeah. Term sheets are emailed in. How would you, how would you not be on time for this meeting, though? You've gotta be on time. I know. Exactly. They're doing the deal in the back of a cab. Oh, yeah. That's the other thing, you know, calculators, like manual calculators, not like Excel or AI now. Shit, people. How are you doing? Where are you? 14th and where? 14th and the river. It's just, traffic's brutal. Maybe we should get off the drive. How will you do that? They're at 39th and 1st. 15 minutes. The interesting thing is the KKR guys, you can see it's a very, it's tense but s- not frenetic. Yeah. On the Shearson side, frenetic. Absolutely. KKR has done this before. Yeah. We're boxed in completely. Yep. Are you serious? Go. Go on, I'm telling you, go. Run. Run. Literally running. Okay, boss. Yep. We're on our way. Those heels, she goes cross-gradings, that's dangerous, but There we are. It's building. Lots of books Yep Guys running Hard copy printed books for everybody Never. This is Kravis. Oh, shit. Move, Roz. Move. Thanks So you just come in the boardroom, drop off your offer, and then leave? Yep. Man. You'll go, in this particular case, uh, and in a lot of cases, if it's really this way, you may end up set into separate conference rooms, 'cause you'll see that there'll be a board advisor that will work the board through the offers, and then- Rob? Rob our luck has been mugged. Rob? You can keep clarifying questions. I'm the only leader. If they're gonna make a decision that night. What the? Uh, just one second. Rob? Where is he? I don't know. Now, first off, I'd like you to know that in the interest of the company, I have retained the services of Peter Atkins of the firm of Skadden Arps to act as- Big money special counsel- Skadden Arps. Yeah to advise us- Yeah and guide us through the legal obligations. $2,000 an hour probably. Yeah. Well, not at, during that time, but today. Yeah. If not more. Before you are copies of the proposals for the buyout of RJR Nabisco. And where do we stand? Ross Johnson's bid, his and Shearson's, is for $100 a share. That's an offer of $23 billion. And KKR? $94 a share. 21.6 billion. That's quite a difference in price. I'll give you a bigger one. The First Boston group is prepared to offer between 105 and 118. Wow. That's $3 billion more than the Johnson offer. That's really high. Is First Boston for real? Well, their proposal is based on taking advantage of certain tax loopholes. If the board has any interest, we'll need some expert advice as to the viability of it all. It would take a week to 10 days. I'd say the board has about $26 billion worth of interest in waiting. Yeah. Yeah, yeah. It's a fair call, Henry. There's no way in the world First Boston can pull it off. No way at all. We're still alive, I promise you. Second place is no better than third All we have to do is lay low. We put out the word we don't know what we're gonna do. Let's let the world know we may not be there in 10 days. And if we do back off, we save ourselves the embarrassment. If we're coming back strong in the second round, why let on? Either way, no one sees our hand. Let them curse the darkness. There's a offer for 118, but it's got some tear on the legal pieces We're not counting our encounters. What makes you think Peter can go any higher than we have? Jesus. Yeah. Government numbers are giving me a nosebleed already. Yeah, the tech side, the tech starts rising. That's- Hold on the fun side. And KKR is gonna say, "We might not- All right. Yes, I'll take it keep our bid out there if we-" It's Linda. She says it's important. Linda? Ross, where you been? And then, yeah, the other parties- Henry have that same time to freshen up their bid based on said loopholes probably, so yep Now, what I've got. Me and Caroline are spending the week there skiing. George has gone home to San Francisco. Carol's with him. You know, someone like KKR probably- Eyes into what? knew of those loopholes, but didn't necessarily- Or he is having karma dinner. There's a strong chance that they might come in bid, bake that into the price 'cause they didn't need to. Well, it depends on the, it depends on, and, you know, we'll see that. All I know is that Henry thinks they're out. Doesn't look like he has. It's pretty possible. But the, the loopholes, some of which may be in- the company may be ineligible for. I don't think like he has. I mean, look at him But you have somebody throw a bid in that's completely off the wall- So high to slow the process. Again- See, they think we're gonna raise our bid. They want Don't bet on it. Why would they put us on for the second act when we weren't in the first round? You may see one of the other folks drop out first boss, so they come back and go in with a lower bid. Or would they say, "What are they doing?" Or, "Why the hell wouldn't they?" I would say it's too- Well, what do you hear? Are they coming back or aren't they? All I know is what Linda tells me, and she's pretty sure they're out. Yes, yes, I'm up. What do you think I'm thinking about? I'm telling you, we play right into their hands if we don't raise our bid. They're laying low so they can come in and clobber us. This is just a head fake. It's a PR job. Well, if it is, it certainly is a masterful one. I don't mind those once in a while, do you? Just for a change Well, you should have gotten away yourself. We've been on the slopes eight hours a day. Well, some of us still have to work for a living, Henry. All of us thought you'd be back here crunching numbers like the rest of us. You crunch numbers, I'll crunch the snow. Let me put Caroline on. Quite a line. I promised my son I wouldn't think about business all week You're sure? Oh, yes, I'm positive. No, he's out of it. Even Caroline thinks so. This form is getting played big time. Trust me, Ron. Kravitz is gonna be there. He's gonna bid. Well, I don't know one thing more than you do. You know that. Well, let me tell you, figuring whether they're in or out is an absolute son of a bitch. Aimsmanship afoot. There we go. Exactly There's the mole in the elevator Mm. Does anyone know it's him yet? Yes. Linda saw him in the, at the show and then told Ross Johnson. Do me one favor, John. Don't wish me luck I wanna thank you all for your patience during this 10-day interval. It was obviously a step that had to be taken. Now that said, I'll turn the meeting over to Peter Atkins. Thank you, Mr. Chairman. Uh, to begin, let me tell you that we're now down to two bidders. After a good deal of effort, First Boston was simply not able to put their offer on the table. That leaves us with Ross Johnson. His group's bumped their previous bid from $100 a share to 101. I think we need to take a very careful look at what KKR has offered. What do you think? I think it's gonna be a long day. A very long day Oh, I have never participated in one of these, like, live time auction kickoffs Yeah. We've gone back and forth, but we've never had- Things like those three things Yes. Drinking and smoking and card playing involved. Yes. The board is just going back and forth? Board's working through the offers with... The board will probably have retained not only Peter Atkins from Skadden Arps, but also have retained an investment banker to help evaluate the structure of the deal and the feasibility. 'Cause the other side of it is they go, "Well, we can do this," but they still have to raise the debt. And so it's- Yeah you know, there's, there's issues around the capital components where it's gotta be real. I've been sent to ask you a question. Is what you've submitted your very best offer? Yes. The very best you can do It is Well, if we can work out some of the details and get comfortable with regard to the financing, I'm prepared to recommend your bid to the board. If you'll just give us a little time, an hour should do it So KKR won? No. It's not over yet. It's not over yet. Wondering when there's gonna be a decision. I'd say there's no reason to hang around. We'll be in touch with you tomorrow. What are you saying tomorrow? What does that mean? Look, I can't tell you anymore. Peter. Are we out of it? I've said all I can say. Well, Charlie, what the hell's going on? I'm still CEO of this company, you know. I mean, we haven't got a new pope around here yet. Or have we? Well, this is most unusual, Ross. I- All right, five minutes. I'll meet you there. I understand my people have been told to go home. Care to embellish that a little? First Boston is out of it. KKR has made a bid. Another bid? A new one, higher than mine? Frankly, it's a blockbuster. Are we talking the neighborhood of $5 higher than mine? Are we talking 106? You said it, boss. I didn't. Skiing my ass. Henry Kravitz was skiing down Mount Bullshit. He sandbagged us. I knew it. You, you said- He was trying too hard to sell me. I could tell you were sure he was out of it. We're the only ones that are gonna be out of it unless we get off our cans. Peter, whip out your calculator. Find out what's going on This, this is very indicative too, though, of how things really go down. I mean, it's, it's like the little stuff behind the scenes. That person getting played by, by one of the, the... I mean, it's just- Just give me 108 it's at the margins where these things get worked out, not just over, over, over the board, obviously And find out about how we've got to do what's best for the shareholders, George. Spears says that 108- Which includes asking you not to leave. We want you in this. Now, you've been more than patient. Give us an hour to go over it all. We are not interested in open-end bidding. Ooh. Just one hour All right. You'll pay our expenses to date, and we'll wait. How much are we talking about? I would say it comes to a hell of a lot more, but, uh, we'll settle for forty-five million. Forty-five million for one hour I think I can sell it Holy shit Thank you, Henry What? Whoa. KKR said, "We're leaving." Yep. Chairman of the board said, "Want you to stay." KKR said- Yep "It'll cost you $45 million to stay for an hour," and they said yes. Yep. Tells you how much money's sloshing around here Lots of backroom conversations happening. Nighttime, cleaning crew Peter Atkins from the Final bid, his final, final bid is for $112 a share. Whoa. The KKR bid is 109. Thank you, Peter. I think it's time to put it to a vote Змію I wonder if that coffee's got, uh, ferret crap in it, Rory. Yeah, exactly. Oh, I'm sorry, Mr. Johnson. We'll do your office after the boardroom. This shouldn't be too long now. They were just getting ready to vote. Good luck. Thanks. They're voting. Yeah. Oreos. That sounds good right now too. Hmm Yeah. R.J.R. Nabisco. Right. Mm-hmm. I'm on my way. Oh, boy. Charlie wants to see me. Oh, boy
Aftermath And Lessons
Both offers were based on extremely complicated structures. We had to consider very carefully just how sound they really were. In the end, I'd say the deciding factor, the one thing that made the Kravis offer more attractive, was the fact that you were not part of it Nobody's gonna deny that there's not a fair amount of greed going around these days. I guess it's just a question of how much greed is fair. Yeah. This, yours, was over the top. It was simply too naked. There was just no way we could let you have this company, Ross I lost my job through The New York Times. Is that it? We'll be discussing your settlement as soon as possible You know, this is the first time I've been out of work since I was nine years old Sure love running this company, Charlie Let you in on a little secret? I'd have paid you to let me do it Thanks, Charlie. We'll be right in I just dropped by to say thank you, you know, for making me a hero with my shareholders. $25.7 billion for the company. In their wettest dreams, they never thought they'd get that rich. If there's anything I can do to help, anything you need. That's very generous, Ross. Yes, well, we don't take over till after the first of the year. We don't have any plans as yet. Well, just holler. Congratulations. You guys bought yourselves one hell of a company I really hate to leave on a sour note, but, uh, about that twenty-five billion, if you're planning on signing for it, Jim Robinson just canceled your American Express card How the hell do you win a company like ours playing lowball? Does somebody wanna tell me that? I never heard of the highest bid ever losing before. I say we were fucked. I say we sue their asses off Could have had it cheaper and $125 million in Shearson's pocket I think it should be the two of us. Yeah. Or it's twice the company. They've collaborated early. Mm-hmm. Egos. Ego. You know, Jim, if I hadn't married Laurie- Fucked, without a doubt I'd have probably married old Anne here. Take care, guys. See you, Ross. Peter. Ross. Jim. KKR got the deal They did. Yep. And now he's flying commercial? Yes. Yeah. Contament. Bill first class, of course. I just hope he's okay, you know? Poor baby. We've got our adjustments to make. He's got his. Dogs at a kennel So Emily, who do we think actually won this debate? Hold on. It says, "By the end of the 1980s, American businesses piled up nearly $1 trillion in debt." We want to deal with shareholders John Green has improved Nabisco's earnings by 40% in the first six months of the takeover. What? Because it governed all the waste. R.J. Reynolds abandoned Premier cigarettes, almost half a billion dollars going up in smoke with Coke Did Cohen resign from Shure's? It was American Express's idea Jim Robertson is no longer with American Express. That was American Express's idea too For the settlement with RJR Nabisco, Ross Johnson received $53 million But that was only around 23 million after tax gains to the firm Wow! I liked it. That was awesome. Really cool. Okay, so AR quote unquote one Yes, they bought the business. Yep. KKR won the deal. Yep. They did win the deal, but the real winners on that deal were the selling shareholders. KKR struggled to get a good return on it 'cause the price was so high. Mm. And it really- Yep was a, a classic example of where a deal, the deal process actually over-maximized the value. Yeah Yep Over maximize the value. Okay. Yeah. It was like- They paid too much for it, and it got... The egos got in the way. They overpaid for the business, and, you know, ev- they got their money out. They didn't have to bankrupt the business. Yeah. I've, I've seen some of these not go that way, um, where they ended up bankrupting the business. But the RJR Nabisco deal is a classic example of the deal fever got into it to the point where the actual return at the private equity level wasn't that attractive, particularly given the risk profile. Absolutely. However, having said that, when they went back public, so when Philip Mo- uh, or RJR Nabisco went public, Philip Morris has a... Had a similar structure. Hmm. And so I've been a Philip Morris shareholder basically since '95. Really? Yep. Hmm. Which has been a fairly, fairly good investment over that period of time. Yeah. It spins dividends nicely. Did this- Yeah Did this take KKR from, like, big to, like, stratospheric player in the space? Um, they were already a stratospheric player, but this was- Oh this was, like, headline news type stuff 'cause of the size of the deal and how... There's RJR Nabisco products in everybody's house. Yes. Okay. So this touches every person in America because of Oreo cookies and, and, you know, Winston Salem cigarettes, and, you know... So for Winston's, you know, so it's... It was, you know, just a... It touched everybody. Everybody knew the product. Everybody was... Dealt with the company. And even though Ross lost, he still got a crap ton of money. Yeah. So you know what he did after? What? He started his own private equity firm. No way. He did? Yep. Yep. He started a, basically, a large family office, brought other folks in, and he was... Sat on a number of boards, and he also passed away about 10 years ago. Um, had a house in Florida, um, and that's where... And that was... He basically... You saw that they... Like, let's go back to Florida, let's go back to Florida. Yeah. Yeah. They basically retired off to Florida. And then they also had a house, I think, in, uh, San Diego. Hmm, okay. Interesting.
Wrap And Subscribe
Yeah. All right. Well, that was like a real life leveraged buyout. It absolutely was, yeah. All right. Well, there we go. Well, that was fun. Hopefully, we'll- There we are let us know if you like these watch alongs- Yeah 'cause there's lots more- I sure had fun. Yeah. That was cool movies that we can watch and, like, learn from, but cool. Yeah. There's a lot of other ones we can do. Absolutely. I'll take a young Jonathan Price. That was cool. Yeah. Yeah. Good stuff. All right. He probably was the best actor in the- He... Yeah. He was so sly. He was just, like, slippery. It was just like, "Oh, man." And whoever wrote for, whoever wrote for the Johnson, for James Garner did a phenomenal job with the one-liners, the zingers, the- Yeah. And if that was really Ross Johnson's personality, it was a great- Yeah. It kinda, it kinda brought it through great. And if it didn't, it ki- it did make him at least somewhat endearing and relatable. Yeah. Yeah. Yeah. Cool. All right. I'm definitely gonna watch again Well, there we go. We'll call that a wrap. Thank you. Very good. If you enjoyed today's episode, please like, share and subscribe wherever you get your podcasts.