Barbarians at the Gate: The Fall of RJR Nabisco. - book reviews

Washington Monthly, Jan, 1990 by David P. Hamilton

My favorite bit of investment banker folklore, however, concerns First Boston's spoiler bid of between $105 and $118. Because it exploited an almost-expired tax loophole that would allow its investors to defer nearly $3.5 billion in taxes, the bank was able to eclipse both Johnson and Kravis, forcing a second bidding round at the last minute.

Competition was the only watchword - the plan's architect barely hesitated when he realized that a deferral of that magnitude would have increased the federal deficit by a full 2 percent. Next time you hear someone rhapsodizing about the virtues of the free market, remind him of this.