One of the most prominent hostile takeovers of all time was the leveraged buyout (LBO) of RJR Nabisco by investment bank KKR in the late 1980s. This takeover was well-documented in “Barbarians at the Gate: The Fall of RJR Nabisco.” RJR Nabisco was created by a record-setting merger between Nabisco and RJ Reynolds for $4.9 billion in 1985. RJR Nabisco was known for the lavish spending of its CEO, F. Ross Johnson, who had a fleet of private jets.
RJR Nabisco fell on hard times after its share price dropped during the 1987 stock market crash. Johnson started looking at possible mergers, believing the cigarette business was likely to come under pressure due to health issues with smoking. He met with numerous investment banks, including KKR, who suggested a LBO structure. Johnson then began pursuing a deal to take the Nabisco brand private while keeping the cigarette business in the hands of shareholders. He got into a bidding war with KKR. KKR eventually won the bidding war, but at the expense of saddling Nabisco with an extreme amount of debt due to the LBO structure. Although he lost the bidding war, Johnson walked away from the deal with about $23 million after taxes.
Mannesmann
Another major hostile takeover in the telecommunications sector was when Vodafone, a British telecommunications company, took over Mannesmann, a German cellphone company, for around $183 billion in stock in 1999. This merger was the first time a German company had been taken over by a foreign company.
Vodafone and Mannesmann waged an intense battle for about three months before Mannesmann ultimately acquiesced to Vodafone’s demands. Mannesmann shareholders received around 59 shares of Vodafone for each share they owned.