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Footnotes 1 . The initial offer for RJR occurred in October 1988 while the mechanics of the buyout were completed in 1989. The mechanics of the buyout consisted of (1) a tender offer for nearly 74% of the shares in February and (2) a merger to eliminate the remaining public shares in early May. 2 . In such a situation, the Board must follow judicially mandated guidelines for an auction‐type procedure as established by MacAndrews & Forbes Holdings, Inc. v. Revlon. 3 . On July 17, 1989 the PIK preferred was exchanged for subordinated debentures due in 2007. 4 . For purposes of this research, the S & P 500 and the Dow Jones 20 industrial bond indices were chosen for the debt and equity securities, respectively. In the event that trading for senior securities did not occur on a daily basis. a multiple day market return was calculated and used to compute the market‐adjusted return. 5 . For the effects of leveraged buyouts on public stockholders, see Harry DeAngelo, Linda DeAngelo, and Edward Rice. “Going Private: Minority Freeze‐outs and Stockholder Wealth,” Journal of Law and Economics , 1984; Khalil M. Torabzadeh and William J. Bertin, “Leveraged Buyouts
Journal of Applied Corporate Finance – Wiley
Published: Jun 1, 1990
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