Barbarians at the Gate (52 page)

“He’s just trying to act cute now,” Cohen told Tom Strauss.

I think we’re out. We’re wasting too much time. You think Kravis is wasting his time? We’ve got to move!

As Forstmann walked off the court, he couldn’t shake the feeling that had plagued him for three days. As much as he wanted to whip Kravis, this didn’t feel like a Forstmann Little deal.
It’s gotta feel right.

Forstmann returned to his apartment to find the phone ringing.

“I’ve been trying to get you.”

The tone of Cohen’s voice instantly conveyed his irritation. Cohen was saying something, but Forstmann wasn’t listening.
I don’t want to be on board with a guy like this. I don’t like this guy. Why can’t he be more like Jim Robinson? You’re trying to make a hooker into a dream girl,
Forstmann told himself,
and it just won’t work.

“Peter, I got the messages,” Forstmann said. “But I’ve been out all day.”

Cohen apologized for the misunderstanding. “I’ve got some good news
for you,” he said. “I’m out at Tommy Strauss’s house. I really think we’ve figured out a way to accommodate your strictures. We can do this. I know we can.” Cohen and Strauss had breezed into the Salomon executive’s Armonk, New York, home in the middle of an informal dinner party, and Cohen had ducked out to call Forstmann.

Forstmann heard dogs barking and children giggling in the background. He heard someone, maybe Cohen, jokingly say, “Get that dog outta here.”

Forstmann warmed to Cohen at that moment, chastising himself for so harshly judging the Shearson executive.
This is more like it,
Forstmann thought.
Dogs and kids. This is good, this is like a family. This is more like Forstmann Little.

Cohen outlined a new capital structure to Forstmann. Salomon and Shearson would each contribute 25 percent of the group’s equity. Forstmann Little would take the remaining 50 percent. Control of the company would be split the same way, with Forstmann Little taking half. The proposal downplayed the junk-bond aspects of the earlier proposal and promised Forstmann Little a greater voice in the future management of RJR. Just as important, Forstmann Little would receive senior debt rather than junior debt—roughly the difference between an American Express card and an IOU.

“How’s that, Ted?” Cohen asked.

Forstmann was genuinely surprised. “Peter, that’s a gigantic step forward,” he said. “That’s great.”

“Let’s get together tomorrow,” Cohen said.

All evening Forstmann’s people analyzed Cohen’s proposal. It looked promising, they agreed. Forstmann tracked down Boisi at a Long Island dinner party after midnight and excitedly passed on the news.

That evening Forstmann’s partner, Brian Little, arrived in San Francisco after a Far Eastern vacation. Little had avidly followed the goings-on at RJR Nabisco at stops in Hong Kong, Thailand, and Bali. Soon after his plane touched down, he was on the phone with Forstmann, who brought him up to date on the talks with Cohen.

Little was immediately turned off by the idea of teaming up with Shearson. “Geez,” he said. “This would be a real departure from anything we’ve done before, working with these guys.”

Little’s reservations went deeper than balance sheets. He had known Cohen for a decade. The two men had weekend homes near each other
in the Hamptons. Little thought Cohen represented the very worst of Wall Street, an abrasive, fee-hungry overreacher. He found the notion of working with the man repulsive.

“Teddy,” Little said, “the guy’s a thug.”

Forstmann assured him the deal they were considering would be “a Forstmann Little deal.” But Brian Little still couldn’t generate any enthusiasm for the partnership, and before hanging up, aimed at Cohen the ultimate insult a Forstmann Little partner could muster: “I’d almost rather be in business with Henry Kravis.”

For years Wall Street public relations has been dominated by a single firm, Kekst & Co., and its well-connected founder, Gershon Kekst. Kekst spokespeople can be found in every major takeover, dishing dirt on that day’s enemy alongside their formal, routine press releases. It was on Gershon Kekst’s advice that Kohlberg Kravis managed to stay out of the headlines for nearly a decade.

Then in the late 1980s came the first serious challenger to Kekst’s rule in years. Linda Robinson was no ordinary flak. She was a tall, willowy strawberry-blond with a knowing smile, a grueling work schedule, and an obvious love of gab. Raised in California, the daughter of the actor who played Amos in radio’s famous “Amos ‘n’ Andy” serials of the 1940s, she was a former debutante who spent the 1970s in a failed marriage and an array of jobs, including one at an acupuncture clinic.

A die-hard Republican, she finagled a job as deputy press secretary to Ronald Reagan’s 1980 presidential campaign. Later she went to work for a company run by the former transportation secretary, Drew Lewis, where she met and married Jim Robinson. After she founded her own New York
firm with a group of friends, Linda Robinson’s affection for her husband began to be displayed publicly, and regularly. “Isn’t he cute?” she asked one female reporter, insisting that the woman fondle Jim Robinson’s biceps.

In no time she became a force to be reckoned with, although she bristled at any suggestion that it was because she was Jim Robinson’s wife. Her clients included Texaco, whom she advised in its drawn-out struggle with Carl Icahn, and Michael Milken of Drexel. Her friends included Tom Brokaw, Diane Sawyer, and Barbara Walters, and her attendance at the marriage of
The Wall Street Journal
’s managing editor was noted by the paper’s staff. “At 35,” the
Journal
observed in a front-page profile in 1988, “she appears poised to wield a degree of behind-the-scenes influence approaching that of a few superlawyers and image makers, invariably men.”

Hired by Ross Johnson within hours of his initial LBO announcement, Linda Robinson found her old friend’s p.r. effort in disarray. It had no theme, no rhyme, no reason. The first week on the assignment she spent keeping up with the avalanche of hostile phone calls. As the chief spokesperson for Johnson’s management group, she was constantly on the phone, ladling out inside details to reporters.

Her activist style quickly alienated Bob Baker, a genteel South Carolinian who was Salomon Brothers’ senior public relations specialist. Baker thought Linda Robinson talked too much. He had argued against a
New York Times
piece Robinson had helped arrange that profiled Cohen and other Wall Street figures involved in the RJR and Philip Morris deals. “That’s what you do when the deal is over,” Baker insisted. “Linda, it’s going to look like a bunch of silly fucking yuppies.”

Matters came to a head when Baker suspected Robinson was plotting to put Cohen on a Sunday morning news show, “This Week with David Brinkley.” The Salomon spokesman, trying to conjure a high profile for his own firm’s deal makers, had arranged for Salomon’s Ron Freeman to appear alongside Ted Forstmann, and didn’t want his man replaced by Cohen.

“Linda, we at Salomon are deferring to you because you work for management,” Baker said. “Far be it from me to suggest that because you sleep with the chairman of American Express you would tilt to Shearson’s interest. On the surface, there would appear to be a conflict of interest
here. I’m not suggesting that. This is not a threat. Just remember, there is life after this deal.”

Although she nearly lost her temper with Baker, Linda Robinson tried to avoid wasting time on bureaucratic squabbling. She had bigger fish to fry. The Robinsons led a busy social life, packed with formal galas of one sort or another; she joked that they tried to spend a night and a half at home together every two weeks. Among the Robinsons’ closer friends were the Henry Kravises. The two couples’ Connecticut spreads were only twenty minutes apart, and Linda had managed to get Kravis interested in the thoroughbred business. The two had just bought their first horse together. They had named it Trillion, although in the weeks to come Kravis would give it a nickname: Cookie Crumbles.

Since Kravis first announced his bid, Linda Robinson had been quietly lobbying him to team up with Johnson. “Linda has always cuddled up to Henry,” says one of Kravis’s aides. “You have to understand these people. They all want to be friends with each other. So Henry starts getting calls from Linda every day. And he starts talking to her. She was playing matchmaker.”

Linda Robinson’s conversations with Kravis were a closely guarded secret. Other than her husband and Johnson, only Steve Goldstone knew of them. Goldstone grew worried: Of all the Wall Street firepower at their disposal, was it wise to have a public relations person as the primary conduit to Kravis?

“Linda, you ought to be careful here,” Goldstone ventured at one point. “You don’t want to be saying anything that the group hasn’t agreed upon in advance.”

Linda Robinson told the lawyer not to worry. She knew what she was doing.

“Talk about the morality, if you will, of what’s going on with these LBOs,” Donaldson urged. “In the old days, companies were built to prosper and hire people, and make a profit for the stockholders…. Now a lot of people get into this business simply to break up companies, to make the maximum money, and to leave town. Is that moral?”

“I think that’s not the only description of the LBO phenomenon,” Freeman replied. “Corporate restructurings occur to vast degrees of difference. For example, some of the largest and best known corporations in the United States have restructured themselves with amazing success. Atlantic Richfield would be a good example of that. AT&T would be another. The extreme cases are only one small part of this overall restructuring movement.”