Barbarians at the Gate: The Fall of RJR Nabisco
Encyclopedia
Barbarians at the Gate: The Fall of RJR Nabisco (ISBN 0-060-16172-8) is a 1990 book about the leveraged buyout
(LBO) of RJR Nabisco
, written by investigative journalists
Bryan Burrough
and John Helyar. The book is based upon a series of articles written by the authors for The Wall Street Journal
. The book was later made into a made-for-TV movie by HBO
, also called Barbarians at the Gate
. The book centers on F. Ross Johnson
, the CEO
of RJR Nabisco, who planned to buy out the rest of the Nabisco shareholder
s.
The opposition to Johnson's bid for the company is one of the pioneers of the leveraged buyout, Henry Kravis
and his cousin George R. Roberts
. Kravis was the first person Johnson talked to about doing the LBO, and feels betrayed after learning that Johnson wants to do the deal with another firm, American Express
's former Shearson Lehman Hutton
division. Ted Forstmann
and his Forstmann Little
buyout firm also played a prominent role.
After Kravis and Johnson are unable to reconcile their differences, a bidding war takes place which Johnson will eventually lose. The unfortunate side effect of the augmented buyout price to the shareholders is the creation of a worrying level of debt
for the company.
In 2008, Harper Collins re-released "Barbarians" to mark the two-decade anniversary of the RJR deal. Media columnist Jon Friedman at MarketWatch
opined on the occasion that it was "the best business book ever." Friedman spoke with the authors about the two-decade history of the book and of their ensuing careers (the two undertook no further joint projects).
for a 1993 television movie of the same name
directed by Glenn Jordan.
Leveraged buyout
A leveraged buyout occurs when an investor, typically financial sponsor, acquires a controlling interest in a company's equity and where a significant percentage of the purchase price is financed through leverage...
(LBO) of RJR Nabisco
RJR Nabisco
RJR Nabisco, Inc., was an American conglomerate formed in 1985 by the merger of Nabisco Brands and R.J. Reynolds Tobacco Company. RJR Nabisco was purchased in 1988 by Kohlberg Kravis Roberts & Co...
, written by investigative journalists
Investigative journalism
Investigative journalism is a form of journalism in which reporters deeply investigate a single topic of interest, often involving crime, political corruption, or corporate wrongdoing. An investigative journalist may spend months or years researching and preparing a report. Investigative journalism...
Bryan Burrough
Bryan Burrough
Bryan Burrough is an American author and correspondent for Vanity Fair. He has written five books: Barbarians at the Gate , Vendetta: American Express and the Smearing of Edmond Safra , Dragonfly , Public Enemies and The Big Rich...
and John Helyar. The book is based upon a series of articles written by the authors for The Wall Street Journal
The Wall Street Journal
The Wall Street Journal is an American English-language international daily newspaper. It is published in New York City by Dow Jones & Company, a division of News Corporation, along with the Asian and European editions of the Journal....
. The book was later made into a made-for-TV movie by HBO
Home Box Office
HBO, short for Home Box Office, is an American premium cable television network, owned by Time Warner. , HBO's programming reaches 28.2 million subscribers in the United States, making it the second largest premium network in America . In addition to its U.S...
, also called Barbarians at the Gate
Barbarians at the Gate (film)
Barbarians at the Gate is a television movie based upon the book by Bryan Burrough and John Helyar, about the leveraged buyout of RJR Nabisco.The film was directed by Glenn Jordan and written by Larry Gelbart. It stars James Garner as F...
. The book centers on F. Ross Johnson
F. Ross Johnson
-Biography:Born in Winnipeg, Manitoba, into a lower-middle-class family, he used a military cadet scholarship program to attend the University of Manitoba where he graduated in 1952 with a Bachelor of Commerce degree and was a member of the fraternity Phi Delta Theta. He went on to earn an M.B.A....
, the CEO
Chief executive officer
A chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
of RJR Nabisco, who planned to buy out the rest of the Nabisco shareholder
Shareholder
A shareholder or stockholder is an individual or institution that legally owns one or more shares of stock in a public or private corporation. Shareholders own the stock, but not the corporation itself ....
s.
The opposition to Johnson's bid for the company is one of the pioneers of the leveraged buyout, Henry Kravis
Henry Kravis
Henry R. Kravis is an American businessman and private equity investor. He is the co-founder of Kohlberg Kravis Roberts & Co., a private equity firm with over $62 billion in assets as of 2011. He has an estimated net worth of $3.7 billion as of September 2011, ranked by Forbes as the 88th richest...
and his cousin George R. Roberts
George R. Roberts
George R. Roberts is an American financier and was one of the three original partners of Kohlberg Kravis Roberts & Co. , which he co-founded alongside Jerome Kohlberg and first cousin Henry Kravis in 1976.-Biography:...
. Kravis was the first person Johnson talked to about doing the LBO, and feels betrayed after learning that Johnson wants to do the deal with another firm, American Express
American Express
American Express Company or AmEx, is an American multinational financial services corporation headquartered in Three World Financial Center, Manhattan, New York City, New York, United States. Founded in 1850, it is one of the 30 components of the Dow Jones Industrial Average. The company is best...
's former Shearson Lehman Hutton
Lehman Brothers
Lehman Brothers Holdings Inc. was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA , doing business in investment banking, equity and fixed-income sales and trading Lehman Brothers Holdings Inc. (former NYSE ticker...
division. Ted Forstmann
Theodore J. Forstmann
Theodore Joseph "Ted" Forstmann was one of the founding partners of Forstmann Little & Company, a private equity firm, and chairman and CEO of IMG, a global sports and media company. A member of the Republican Party, Forstman was a philanthropist...
and his Forstmann Little
Forstmann Little & Company
Forstmann, Little & Company is a private equity firm, specializing in leveraged buyouts . At its peak in the late 1990s, Forstmann Little was among the largest private equity firms globally...
buyout firm also played a prominent role.
After Kravis and Johnson are unable to reconcile their differences, a bidding war takes place which Johnson will eventually lose. The unfortunate side effect of the augmented buyout price to the shareholders is the creation of a worrying level of debt
Debt
A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
for the company.
In 2008, Harper Collins re-released "Barbarians" to mark the two-decade anniversary of the RJR deal. Media columnist Jon Friedman at MarketWatch
MarketWatch
MarketWatch operates a financial information website that provides business news, analysis and stock market data to some 6 million people. MarketWatch offers personal finance news and advice, tools for investors and access to industry research. Along with its flagship website, the company operates...
opined on the occasion that it was "the best business book ever." Friedman spoke with the authors about the two-decade history of the book and of their ensuing careers (the two undertook no further joint projects).
Important personalities
- Peter CohenPeter A. CohenPeter A. Cohen was the former Chairman and Chief Executive Officer of Shearson Lehman Brothers, later known as Shearson Lehman Hutton from 1983 through 1990. Today, Cohen serves as Chairman and CEO of Cowen Group, formerly known as Cowen & Company.-Career:...
, Chairman and Chief Executive Shearson Lehman Hutton - Nick ForstmannNicholas C. ForstmannNicholas C. "Nick" Forstmann was one of the founding partners of Forstmann Little & Company, a private equity firm.After attending The Lawrenceville School, Nicholas Forstmann graduated from Georgetown University in 1969, and began working at the Morgan Guaranty Trust Company...
, Senior Partner, Forstmann Little & CompanyForstmann Little & CompanyForstmann, Little & Company is a private equity firm, specializing in leveraged buyouts . At its peak in the late 1990s, Forstmann Little was among the largest private equity firms globally... - Ted ForstmannTheodore J. ForstmannTheodore Joseph "Ted" Forstmann was one of the founding partners of Forstmann Little & Company, a private equity firm, and chairman and CEO of IMG, a global sports and media company. A member of the Republican Party, Forstman was a philanthropist...
, Senior Partner, Forstmann Little & Company - John Greeniaus, President and Chief Executive Officer of Nabisco division of RJR Nabisco
- Charlie Hugel, Chairman of the Board, RJR Nabisco
- Ed Horrigan, President and Chief Executive Officer of R.J. Reynolds Tobacco division of RJR Nabisco
- F. Ross JohnsonF. Ross Johnson-Biography:Born in Winnipeg, Manitoba, into a lower-middle-class family, he used a military cadet scholarship program to attend the University of Manitoba where he graduated in 1952 with a Bachelor of Commerce degree and was a member of the fraternity Phi Delta Theta. He went on to earn an M.B.A....
, President and CEO, RJR Nabisco - Henry KravisHenry KravisHenry R. Kravis is an American businessman and private equity investor. He is the co-founder of Kohlberg Kravis Roberts & Co., a private equity firm with over $62 billion in assets as of 2011. He has an estimated net worth of $3.7 billion as of September 2011, ranked by Forbes as the 88th richest...
, Senior Partner, Kohlberg Kravis Roberts & Co.Kohlberg Kravis Roberts & Co.KKR & Co. L.P. is an American-based global private equity firm, specializing in leveraged buyouts, based in New York. The firm sponsors and manages private equity investment funds. Since its inception, the firm has completed over $400 billion of private equity transactions and was a pioneer in... - George R. RobertsGeorge R. RobertsGeorge R. Roberts is an American financier and was one of the three original partners of Kohlberg Kravis Roberts & Co. , which he co-founded alongside Jerome Kohlberg and first cousin Henry Kravis in 1976.-Biography:...
, Senior Partner, Kohlberg Kravis Roberts & Co. - Jim RobinsonJames D. Robinson IIIJames Dixon Robinson III was the chief executive officer of American Express Co. from 1977 until his retirement in 1993.-Education:...
, Chairman and Chief Executive American ExpressAmerican ExpressAmerican Express Company or AmEx, is an American multinational financial services corporation headquartered in Three World Financial Center, Manhattan, New York City, New York, United States. Founded in 1850, it is one of the 30 components of the Dow Jones Industrial Average. The company is best... - Peter Atkins, from the Law firm of Skadden, Arps, Slate, Meagher & FlomSkadden, Arps, Slate, Meagher & FlomSkadden, Arps, Slate, Meagher & Flom LLP and Affiliates , founded in 1948, is a prominent law firm based in New York City. With over 2,000 attorneys, it is one of the largest and highest-grossing law firms in the world. Forbes magazine calls Skadden "Wall Street's most powerful law firm"...
. Special Counsel to the RJR Nabisco Board of Directors.
Film adaptation
The book was adapted by Larry GelbartLarry Gelbart
Larry Simon Gelbart was an American television writer, playwright, screenwriter and author.-Early life:...
for a 1993 television movie of the same name
Barbarians at the Gate (film)
Barbarians at the Gate is a television movie based upon the book by Bryan Burrough and John Helyar, about the leveraged buyout of RJR Nabisco.The film was directed by Glenn Jordan and written by Larry Gelbart. It stars James Garner as F...
directed by Glenn Jordan.
External links
- Book review by David P. Hamilton, Washington Monthly, January 1990