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The Fall of RJR Nabisco by Burroughs and Hayler

The Justice Department challenged a minuscule number (twenty-six) of the nearly 11,000 corporate deals for which pre-merger notification was required . . . In 1986 [after two earlier "revisions" of merger guidelines in 1982 and 1984] the administration asked Congress to gut the nation's anti-merger law by new legislation" (Adams & Brock, 1989, p. 27). The editors of Insight quote Donald Baker, anti-trust chief under President Ford: "The 'stark truth . . . is that the Antitrust Division today is less than two-thirds its size when President Reagan took office. It is smaller than when I came to it first in October 1966 . . . '" (Insight, 1987, p. 12).

The Wall Street Journal describes the "raft of 'quasi-consolidations' or 'joint ventures' occurring during the Reagan years, and concludes with one individual's observations, which make clear the prevailing atmosphere of unregulated merging for the purpose of unparalleled profits in the 1980s prior to the RJR Nabisco leveraged buyout process: "Overwhelmed by this vast intercorporate web of cross-ownership, joint production, and co-supply arrangements, an exasperated Congressman from Illinois . . . exclaimed: 'It used to be 'us' versus 'them.' Now, we don't know who's 'us' and who's 'them'" (Wall Street Journal, 1985, p. 54).

The greed which prevailed in the environment created a sense of uncertainty throughout the money market, as Winkler and Herman noted in The Wall Street Journal in their article "Takeover Fears Rack Corporate Bonds." In that article, the authors note that the corporate bond market was in a state of near-chaos as investors watched RJR Nabisco's proposed leveraged buyout and, as a result, increasingly chose not to buy investment-grade industrial issues (Wall street Journal, 1988, pp. C1, C21).

Clearly, the prevailing atmosphere was composed of a set of expectations which were based in part on the direction of the stock market and the business community as the n...

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The Fall of RJR Nabisco by Burroughs and Hayler. (1969, December 31). In Retrieved 04:05, August 20, 2017, from
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