RJR Nabisco: Current And Future Financial Policy
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After the merger of RJR Nabisco the company is performing well financially with the net income of $1,064 million dollars in the year 1986 and $1209 million dollars in 1987. Despite of that the company’s share price was low compared to the worth of the company, and the stock price at the end of 1987 was $45 per share. The main reason for that was the joint operation of food and tobacco business. The CEO of the company concluded that their food division was highly undervalued and only way to recognize their value was through the leveraged buyout of the undervalued food assets. After that, CEO announced the LBO decision in front of the board, and board gave its approval for the management to go ahead with its
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When the RJR Nabisco buyout happened many factors were in play from the two competitors in play to buy the company first was Ross Johnson’s management, a group who had originally come to the table with a 75 dollars a share offer. Then when the news came out about the LBO Kohlberg, Kravis and Roberts or KKR were bidding 90 dollars a share for RJR Nabisco. Now with two competitors in play it was now a game of who may put together the highest bid or the best bid possible to buy the company. What we decided as a group was yes Ross Johnson had the highest bid, but we think Ross Johnson’s group should have won the company because there were incentives with Ross Johnson’s group taking over the company instead of what happened with
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ECONOMICS PROJECT Name: Saatwic Malhotra Course: BBA.LLB (H) Section: A Enrollment Number: 7058 ACKNOWLEDGEMENT I express my sincere thanks to Mrs. Tanu Sachdeva, my economics teacher who guided me throughout the project and also gave me valuable suggestions and guidance for completing the project. She helped me to understand the issues involved in the project making besides effectively presenting it. My project has been a success because of her. PEPSICO • PepsiCo, Inc. is an American multinational food, snack, and beverage corporation headquartered in Purchase, New York. PepsiCo has interests in the manufacturing, marketing, and distribution of grain-based snack foods, beverages, and other products.
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