Word: philip
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Dates: during 1980-1989
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...Philip Morris hopes Kraft will not be as resistant to a takeover as Pillsbury, which is fighting a $5.2 billion offer from Grand Metropolitan, a British liquor conglomerate (J&B Scotch and Smirnoff vodka). Last week the company took out full-page newspaper ads that showed the normally cherubic Pillsbury Doughboy with a grim expression and wearing boxing gloves. Warned the ad: "We're not going to sit idly by while an opportunistic British liquor and gambling company tries to buy respectability...
...merit of domestic mergers is a matter of debate. Friendly unions of two firms may help the combined company compete against foreign rivals. Philip Morris, for example, hopes its purchase of Kraft will create a more formidable ) opponent to the West European consumer goods giants Nestle and Unilever. And because most industries now operate in a global marketplace, there is decreasing danger that mergers will stifle U.S. competition and raise consumer prices...
Risks arise, though, when takeovers force a company to assume excessive debt. The proposed buyout of RJR Nabisco, for example, could load the company with enough debt to make it vulnerable to rising interest rates and a recession. Since Philip Morris will borrow about $9 billion to buy Kraft, its obligations too could become uncomfortable. The tobacco conglomerate is confident, however, that its cigarette business will generate enough cash to pay off its debts...
...they take effect, the Philip Morris and RJR Nabisco deals may prove to be textbook cases of smart corporate strategies. They could also turn out to be flops -- or so U.S. business history would suggest. In the 1960s some of America's most celebrated executives, including Harold Geneen at ITT and Charles Thornton at Litton Industries, acquired scores of companies and built huge conglomerates. Like many empires, they eventually declined. A similar fate may await some of today's dealmakers...
STAFF WRITERS: Daniel Benjamin, Gordon Bock, Janice Castro, Howard G. Chua- Eoan, Philip Elmer- DeWitt, Guy D. Garcia, Nancy R. Gibbs, Richard Lacayo, Scott MacLeod, Barbara Rudolph, Michael S. Serrill, Laurence Zuckerman...