R. J. Reynolds Nabisco, Inc.,

doing business as A trade name, trading name, or business name is a pseudonym used by companies that do not operate under their registered company name. The term for this type of alternative name is fictitious business name. Registering the fictitious name with ...

RJR Nabisco, was an American conglomerate, selling

tobacco Tobacco is the common name of several plants in the genus '' Nicotiana'' of the family Solanaceae, and the general term for any product prepared from the cured leaves of these plants. More than 70 species of tobacco are known, but the ...

and food products, headquartered in the Calyon Building in Midtown Manhattan, New York City. R. J. Reynolds Nabisco stopped operating as a single entity in 1999. Both RJR (as R. J. Reynolds Tobacco Company) and

Nabisco Nabisco (, abbreviated from the earlier name National Biscuit Company) is an American manufacturer of cookies and snacks headquartered in East Hanover, New Jersey. The company is a subsidiary of Illinois-based Mondelēz International. Nabisco' ...

(now part of Mondelēz International) still exist.

History

RJR Nabisco was formed in 1985 by the merger of Nabisco Brands and R. J. Reynolds Tobacco Company. In 1988 RJR Nabisco was purchased by Kohlberg Kravis Roberts & Co. in what was at the time the largest

leveraged buyout A leveraged buyout (LBO) is the acquisition of a company using a significant proportion of borrowed money (Leverage (finance), leverage) to fund the acquisition with the remainder of the purchase price funded with private equity. The assets of t ...

in history. In 1999, due to concerns about tobacco lawsuit liabilities, the tobacco business was spun off into a separate company and RJR Nabisco was renamed Nabisco Holdings Corporation. Nabisco is currently owned by Mondelēz International Inc. RJR Nabisco Holdings Corp. (NYSE: NGH) was the parent company of RJR Nabisco, Inc. After the food and tobacco businesses separated in June 1999, Nabisco Group Holdings Corp. owned 80% of RJR Nabisco Holdings Corp., which was the parent company of Nabisco, Inc.

Formation

R. J. Reynolds Tobacco Company was founded in

Winston-Salem, North Carolina Winston-Salem is a city in Forsyth County, North Carolina, United States, and its county seat. At the 2020 United States census, 2020 census, the population was 249,545, making it the List of municipalities in North Carolina, fifth-most populous ...

, in 1875 and changed its name to R. J. Reynolds Industries, Inc. in 1970. It became RJR Nabisco on April 25, 1986, after the company's $4.9 billion purchase, and earlier 1.9 billion stock swap, of Nabisco Brands Inc. in 1985. On May 7, 1986, one week after the merger, RJR Nabisco sold Del Monte's frozen foods unit to ConAgra Foods, followed by the sales of the soft drink brands Canada Dry and Sunkist to

Cadbury Schweppes Cadbury, formerly Cadbury's and Cadbury Schweppes, is a British multinational corporation, multinational confectionery company owned by Mondelez International (spun off from Kraft Foods, Inc., Kraft Foods) since 2010. It is the second-largest c ...

on June 3, 1986, the KFC fast-food chain to

PepsiCo PepsiCo, Inc. is an American multinational corporation, multinational food, snack, and beverage corporation headquartered in Harrison, New York, in the hamlet of Purchase, New York, Purchase. PepsiCo's business encompasses all aspects of the f ...

on July 25, 1986, and Heublein to Grand Metropolitan on January 17, 1987.

Headquarters move

In August 1986, the RJR Nabisco board announced that F. Ross Johnson would replace J. Tylee Wilson as head of the company effective January 1, 1987. Soon after, Johnson, believing "bucolic" Winston-Salem did not have the right image for a "world-class company", began seeking other possible headquarters cities. After ruling out

New York City New York, often called New York City (NYC), is the most populous city in the United States, located at the southern tip of New York State on one of the world's largest natural harbors. The city comprises five boroughs, each coextensive w ...

and

Dallas Dallas () is a city in the U.S. state of Texas and the most populous city in the Dallas–Fort Worth metroplex, the List of Texas metropolitan areas, most populous metropolitan area in Texas and the Metropolitan statistical area, fourth-most ...

, the company decided on

Atlanta Atlanta ( ) is the List of capitals in the United States, capital and List of municipalities in Georgia (U.S. state), most populous city in the U.S. state of Georgia (U.S. state), Georgia. It is the county seat, seat of Fulton County, Georg ...

because it was "nouveau riche and overbuilt". On January 15, 1987, the RJR Nabisco board approved a headquarters move from Winston-Salem to

Cobb County, Georgia Cobb County is a County (United States), county in the U.S. state of Georgia (U.S. state), Georgia, and is a core county of the Atlanta metropolitan area in the north-central portion of the state. As of the 2020 Census, the population was 766, ...

, north of Atlanta, where the company had rented space. The move would affect 250 to 300 employees, while Winston-Salem would still have 14,000 people working for the company. RJR Nabisco donated the 519,000-square-foot World Headquarters Building to

Wake Forest University Wake Forest University (WFU) is a private research university in Winston-Salem, North Carolina, United States. Founded in 1834, the university received its name from its original location in Wake Forest, north of Raleigh, North Carolina. The R ...

but continued to use it until the September 1987 move. Later, RJR Nabisco's Planters- Life Savers Division moved to the former headquarters building.

KKR leveraged buyout

The RJR Nabisco leveraged buyout was, at the time, widely considered to be the preeminent example of corporate and executive

greed Greed (or avarice, ) is an insatiable desire for material gain (be it food, money, land, or animate/inanimate possessions) or social value, such as status or power. Nature of greed The initial motivation for (or purpose of) greed and a ...

. Bryan Burrough and John Helyar published '' Barbarians at the Gate: The Fall of RJR Nabisco'', a successful book about the events which later became a

television movie A television film, alternatively known as a television movie, made-for-TV film/movie, telefilm, telemovie or TV film/movie, is a film with a running time similar to a feature film that is produced and originally distributed by or to a Terrestr ...

for

HBO Home Box Office (HBO) is an American pay television service, which is the flagship property of namesake parent-subsidiary Home Box Office, Inc., itself a unit owned by Warner Bros. Discovery. The overall Home Box Office business unit is based a ...

. Ross Johnson was the President and CEO of RJR Nabisco at the time of the leveraged buyout and

Henry Kravis Henry Roberts Kravis (born January 6, 1944) is an American businessman, investor, and philanthropist.Kohlberg Kravis Roberts & Co. The

was in the amount of $25 billion, and the battle for control took place between October and November 1988. Although KKR eventually took control of RJR Nabisco, RJR management and Shearson Lehman Hutton had originally announced that they would take RJR Nabisco private at $75 per share. A fierce series of negotiations and proposals ensued which involved nearly all of the major private equity players of the day, including

Morgan Stanley Morgan Stanley is an American multinational investment bank and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in 42 countries and more than 80,000 employees, the firm's clients in ...

Goldman Sachs The Goldman Sachs Group, Inc. ( ) is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered in Lower Manhattan in New York City, with regional headquarters in many internationa ...

Salomon Brothers Salomon Brothers, Inc., was an American multinational bulge bracket investment bank headquartered in New York City. It was one of the five List of investment banks, largest investment banking enterprises in the United States and a very profitabl ...

, First Boston, Wasserstein Perella & Co., Forstmann Little, Shearson Lehman Hutton, and

Merrill Lynch Merrill Lynch, Pierce, Fenner & Smith Incorporated, doing business as Merrill, and previously branded Merrill Lynch, is an American investment management and wealth management division of Bank of America. Along with BofA Securities, the investm ...

. Once put in play by Shearson Lehman Hutton and RJR management, almost every major Wall Street firm involved in M&A launched frenzied, literal last-minute bids in a fog of incomplete or misleading information. KKR quickly introduced a tender offer to obtain RJR Nabisco for $90 per share—a price that enabled it to proceed without the approval of RJR Nabisco's management. RJR's management team, working with Shearson Lehman Hutton and Salomon Brothers, submitted a bid of $112, a figure they felt certain would enable it to outflank any response by Kravis. KKR's final bid of $109, while a lower dollar figure, was ultimately accepted by the board of directors. It was accepted because KKR's offer was guaranteed whereas management's lacked a "reset", meaning that the final share price might have been lower than their professed $112 per share. Additionally, many in RJR's board of directors had grown concerned at recent disclosures of Johnson's unprecedented golden parachute deal. ''

Time Time is the continuous progression of existence that occurs in an apparently irreversible process, irreversible succession from the past, through the present, and into the future. It is a component quantity of various measurements used to sequ ...

'' magazine featured Johnson on the cover of its December 1988 issue along with the headline "A Game of Greed: This man could pocket $100 million from the largest corporate takeover in history. Has the buyout craze gone too far?". KKR's offer was welcomed by the board, and, to some observers, it appeared that their elevation of the reset issue as a deal-breaker in KKR's favor was little more than an excuse to reject Johnson's higher payout of $112 per share. Johnson received compensation worth more than $60 million from the buyout, then left in February 1989. In March 1989, Louis V. Gerstner of

American Express American Express Company or Amex is an American bank holding company and multinational financial services corporation that specializes in payment card industry, payment cards. It is headquartered at 200 Vesey Street, also known as American Expr ...

became the new head of RJR Nabisco.

After the KKR buyout

On April 27, 1989, RJR Nabisco announced it would move its headquarters to the

area. As a result of the acquisition, RJR Nabisco divested the following divisions: * Nabisco's UK operations (including Smith's and Walkers), Belin of France, and Saiwa of Italy were sold to BSN. Smith's and Walkers were swiftly resold to

. * Chun King was sold to Yeo Hiap Seng. * Associated Biscuits International (consisting of 38% of India's Britannia and 40% of Pakistan's English Biscuit Manufacturers) was sold to

Britannia Industries Britannia Industries Limited is an Indian Multinational corporation, multinational food products company, which sells biscuits, breads and dairy products. Founded in 1892, it is one of India's oldest existing companies and currently part of t ...

. * Fresh Del Monte Produce was sold to Polly Peck. *

Del Monte Foods Del Monte Foods Inc. ( trading as Del Monte Foods) is an American food production and distribution company and subsidiary of NutriAsia, headquartered in Walnut Creek, California. Del Monte Foods is one of the largest producers, distributor ...

was sold to

, Citicorp Venture Capital, and Kikkoman. Del Monte's Asia operations (outside the Philippines) were separately sold to Kikkoman. * The company's 20% stake in ESPN Inc. was sold to

Hearst Communications Hearst Corporation, Hearst Holdings Inc. and Hearst Communications Inc. comprise an American multinational mass media and business information conglomerate owned by the Hearst family and based in Hearst Tower in Midtown Manhattan in New York ...

. Another major consequence of the buyout was that according to

United States Department of Labor The United States Department of Labor (DOL) is one of the executive departments of the U.S. federal government. It is responsible for the administration of federal laws governing occupational safety and health, wage and hour standards, unemp ...

, in its report "American Workplace", over 2,000 workers subsequently lost their jobs, of which 72% were eventually replaced, but earning less than half of their previous incomes, suggesting that it took most of those who lost their jobs an average of 5.6 months to find new employment. On March 21, 1991, RJR Nabisco Holdings Corp. became a publicly traded stock. In March 1999, RJR Nabisco announced the sale of the international division of R. J. Reynolds Tobacco to

Japan Tobacco The (JT) is a Japanese diversified tobacco company and parent company to Japan Tobacco International, one of the three largest international Big Tobacco product manufacturers in the world. It was established in 1985 as a that inherited the ri ...

, creating what is now known as

Japan Tobacco International JTI - Japan Tobacco International is the international tobacco division of Japan Tobacco (Global Fortune 500), one of the three largest international Big Tobacco product manufacturers. The holding company is JT International SA and headquartere ...

,and in June of that year, the company sold the remainder of R. J. Reynolds Tobacco to stockholders. The parent company became Nabisco Group Holdings and owned 80.5 percent of Nabisco Holdings. In 2000, Philip Morris bought Nabisco Holdings. Soon after that, R. J. Reynolds Tobacco Holdings, Inc., first traded in June 1999, announced the acquisition of Nabisco Group Holdings. The deal was completed in December 2000.

Controversy

Ads on smoking-free flights

In April 1988, RJR Nabisco fired the Saatchi & Saatchi advertising agency after their

Northwest Airlines Northwest Airlines (often abbreviated as NWA) was a major airline in the United States that operated from 1926 until it Delta Air Lines–Northwest Airlines merger, merged with Delta Air Lines in 2010. The merger made Delta the largest airline ...

ad introducing the airline's in-flight smoking ban. This was despite the agency only being contracted for Nabisco products, not any tobacco products.

Pandora Papers

In 2021, RJR Nabisco (before it split up) was listed in the

Pandora Papers The Pandora Papers are 11.9 million leaked documents with 2.9 terabytes of data that the International Consortium of Investigative Journalists (ICIJ) published beginning on 3 October 2021. The leak exposed the secret offshore accounts of 35 ...

after the law firm

Baker McKenzie Baker McKenzie is an international law firm headquartered in Chicago. Founded in 1949 under the name Baker & McKenzie, it has 68 offices in 46 countries and employs 4,558 attorneys. History Co-founding partner Russell Baker, who had graduate ...

set up shell companies in Cyprus.

References

External links

RJR Nabisco
(Archive) {{DEFAULTSORT:Rjr Nabisco R. J. Reynolds Tobacco Company Defunct food and drink companies of the United States Tobacco companies of the United States Kohlberg Kravis Roberts companies Companies formerly listed on the New York Stock Exchange