Commentary: Lessons From Rjr: Funny Money Then And Now

It's a cautionary tale for our time. Just as the '90s draw to a close on a note of financial frenzy, the most wretched excess of the '80s returns to haunt us--and perhaps guide us. Ten years after it used junk bonds to pull off one of the biggest leveraged buyouts in history, RJR Nabisco Inc. is dismembering itself. Today, as Net stocks soar and the Dow Jones industrial average lurches toward 10,000, it is sobering to remember that the $25 billion paid for RJR Nabisco by investment bank Kohlberg Kravis Roberts & Co. is now worth $9.5 billion. An out-of-control bidding war, blindly driven by ego and greed (so wonderfully captured in Barbarians at the Gate), led, in the end, to disaster. Only KKR's partners appeared to have done O.K., thanks to their huge fees.

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