Read Barbarians at the Gate Online
Authors: Bryan Burrough,John Helyar
Barbarians at the Gate (83 page)
As the evening wore on, Steve Goldstone paced his office nervously. No news, he told himself, was bad news. Something has gone wrong. Maybe they’re taking First Boston seriously, he thought. God forbid, maybe Kravis bid.
Where were they?
As he paced, Goldstone indulged a nervous habit that never failed to irk his colleagues. At times of high stress, he took to squeezing the erasers off the ends of number-two pencils. Sometimes he pressed so hard the tiny pink dots popped across the room and bounced off people’s foreheads. That night Goldstone’s office floor was littered with severed eraser heads.
By half past nine Goldstone could stand the suspense no longer. First he phoned his partner Dennis Hersch at home; Goldstone put Hersch on a speaker phone to listen as he called Atkins. The Skadden lawyer, just finishing his conversation with Jim Maher, returned the call minutes later.
“Peter, I’ve got a pile of people waiting around,” Goldstone said. “Are
you guys going to make a decision tonight? Do we need to be waiting around?”
“I’d say there’s no reason for your people to hang around tonight,” Atkins said. “We’ll be in touch with you tomorrow.”
The words were a splash of ice water in Goldstone’s face.
“What are you saying? What does that mean?” Anxiety crept into Goldstone’s voice. “Are we out of it?”
Atkins was a blank wall. “Look, I can’t say any more.”
Goldstone persisted. “Are we out of it?”
“Look,” Atkins said, “all I can tell you is, we don’t need you tonight. You can tell your people to go home.”
Goldstone’s call sent electric shocks through the gathering at Willkie Farr. The poker game was forgotten; the car magazines were tossed in a corner. Worried looks broke out as questions swept the group loitering at Nusbaum’s office.
What does that mean?
What’s going on?
Minutes later the group suffered a second, greater shock. Nusbaum took a call from a reporter, who passed along the information that Kravis had just been summoned to Skadden Arps. Had Shearson?
“No,” Nusbaum stammered, “we haven’t.”
Nusbaum was thunderstruck.
Kravis?
He couldn’t believe it. Peter Cohen couldn’t believe it, either. All at once he knew something had gone terribly, terribly wrong.
Chaos broke out among the advisers at Willkie Farr. Everyone had an idea what had happened, what to do. Gutfreund, having pocketed his poker winnings, angrily demanded that someone—
anyone
—get over to Skadden right away.
“This is bullshit!” Gutfreund railed. “Get in there. Just get somebody in there. Here we are standing around playing with ourselves. Let’s get someone in there….”
Nusbaum thought quickly. Something had to be done fast. A letter: that was the answer. As many lawyers do when nursing a grievance, Nusbaum knew it was important to get their anger down into writing. As
Cohen and the investment bankers shouted and cursed around him, he began dictating.
Bob Hope had almost finished the evening’s program at the Boys Club dinner when Linda Robinson was called from the table for an urgent telephone call. Excusing herself, she hustled into the Marriott’s kitchen to take it.
When she returned, Eric Gleacher could tell she was fuming.
She knows where we are,
he thought. Gleacher couldn’t help but smile. The moment the program ended, the Robinsons were up and away from the table.
Linda Robinson had one parting line for the Morgan Stanley banker. “Gleacher,” she said, “you’re a fucking liar.” There was the wisp of a smile on her lips.
Gleacher looked Jim Robinson’s wife square in the eyes.
“Linda, you just don’t get it, do you? There’s just no way this board is going to give this company to Ross Johnson.”
Johnson, Horrigan, and the rest of the RJR Nabisco executives were passing the time over drinks at Nine West when they heard the news. Bit by bit reports dribbled in, and they were all bad. Atkins had told Goldstone he could go home, and Kravis was invited to Skadden. If that weren’t bad enough, Bill Liss—still supposedly representing the special committee—called and said he had been asked to ready a public announcement the next morning. The signs of defeat were unmistakable.
“That’s it. Lights out,” Johnson said. “As far as I’m concerned, it’s sayonara.”
When Goldstone heard Kravis was at Skadden Arps, he immediately redialed Atkins. Twenty billion dollars and more than a few careers, maybe even his own, were on the line. Atkins put him on the squawk box. Soon the lawyer’s office was filled with the anguished tones of Goldstone’s voice.
The management group had been cheated, Goldstone insisted. They had been placed in an untenable position, indeed robbed of victory, by
that lunatic First Boston bid. As the first round’s high bidder, they had no incentive to boost their offer. In essence, Goldstone argued, they were forced to bid against themselves. To be fair, he insisted, there had to be another, final round of bidding.
“We’re not done!” Goldstone insisted, pacing amid the eraser heads littering his office floor. “Peter, we’re willing to bid more. We’ll bid more! What is this nonsense about starting an auction and shutting it down an hour later? There are no rules governing these procedures. We put in a bid saying we’ll bid more, and we will. How can you do this? It’s not fair!”
Atkins tried to calm the feverish lawyer but got nowhere.
“Peter, you’ve got to keep the bidding open. You’ve got to keep the bidding open as long as people are willing to bid.”
For forty-five minutes Goldstone pounded at the same theme, and Atkins, emotionless, assured Goldstone his arguments would be taken into account. But there was nothing he, Atkins, could do until the committee met the next morning. Privately, Atkins and the Skadden litigator, Mike Mitchell, found Goldstone’s argument no more persuasive than others he had made over the past six weeks. The crux of Goldstone’s case seemed to be that management was entitled to two out of three falls.
A few minutes before eleven o’clock, as his impassioned soliloquy stretched on, Goldstone mentioned to Atkins that he would be receiving a letter of protest from Jack Nusbaum. The letter “has been tempered somewhat,” Goldstone allowed. “But Peter, you’ve got to understand. People are bouncing off the walls over here. They’re really upset.”
At eleven o’clock the letter was delivered to Atkins’s office. “I’ve got it now,” he told Goldstone, glad for the excuse to end the lawyer’s pleas. “We’ll get back to you later.”
Atkins hung up and looked at Nusbaum’s letter. It was on the stationery of the lawyer’s firm, Willkie Farr & Gallagher.
Gentlemen:
…During the last several hours we have been receiving regular reports from the press advising us of the precise nature of the bid submitted today on behalf of the management group, as well as periodic reports that you or your representatives have met earlier this evening with representatives of another bidding group whose bid, if the reports we are receiving are accurate, has seemed to improve as the evening has progressed.
We believe that the Management Group has been disadvantaged
throughout the entire process and we must now insist that if you are talking to other bidders you must talk to us as well so that we have an opportunity to consider our response to any bid which may exceed ours, just as other bidding groups had an opportunity to bid against our winning bid which you published on November 18th.
Our letter to you today indicated a willingness to discuss all aspects of our proposal. We reiterate that willingness and look forward to the opportunity to continue the bidding process, if that is appropriate, in the full light of day with details of all the present bids being known to all parties.
The members of the Management Group are at the offices of the undersigned and would appreciate a prompt telephonic response to this letter.
Sincerely,
Jack Nusbaum
Atkins set down the letter and frowned. It was going to be another long night.
With their protest issued the group at Willkie Farr cooled down and awaited a response. Clusters of tired men stood talking in the halls. In Nusbaum’s conference room Gutfreund sat in one corner, reading the latest copy of
Manhattan, inc.
A few people dozed off. George Sheinberg of Shearson showed up and passed around a handful of cigars. For an hour there was peace.
At Nine West, the Robinsons joined the group in Horrigan’s corner office. The couple’s formal attire prompted a round of jokes from Johnson. “A bottle of white and a bottle of red,” he requested of the tuxedoed Robinson. There was little to do but wait. From time to time Johnson tried to reach Charlie Hugel at his hotel room. Maybe, he thought, Hugel could make some sense of all this.
