Editing Corporate raid (section)

==History==
{{History of private equity and venture capital}}
{{main|History of private equity and venture capital}}
Corporate raids became a hallmark of investors in the 1970s and 1980s, particularly highlighted by the public suicide of [[Eli Black]]. Among the most notable corporate raiders of the 1970s and 1980s were [[Louis Wolfson]], [[Carl Icahn]], [[Victor Posner]], [[Meshulam Riklis]], [[Nelson Peltz]], [[Robert Bass|Robert M. Bass]], [[T. Boone Pickens]], [[Paul Bilzerian]], [[Harold Clark Simmons]], [[Kirk Kerkorian]], [[James Goldsmith]], [[Saul Steinberg (business)|Saul Steinberg]] and [[Asher Edelman]]. These investors used a number of the same tactics and targeted the same type of companies as more traditional leveraged buyouts and in many ways could be considered a forerunner of the later private equity firms. In fact it is Posner, one of the first "corporate raiders," who is often credited with coining the term "[[leveraged buyout]]" or "LBO".<ref>Trehan, R. (2006). ''[http://www.4hoteliers.com/4hots_fshw.php?mwi=1757 The History Of Leveraged Buyouts]''. December 4, 2006. Accessed May 22, 2008</ref>

[[Victor Posner]], who had made a fortune in real estate investments in the 1930s and 1940s, acquired a major stake in [[Triarc|DWG Corporation]] in 1966. Having gained control of the company, he used it as an investment vehicle that could execute [[takeover]]s of other companies. Posner and DWG are perhaps best known for the hostile takeover of [[Sharon Steel Corporation]] in 1969, one of the earliest such takeovers in the United States. Posner's investments were typically motivated by attractive valuations, balance sheets and cash flow characteristics. Because of its high debt load, Posner's DWG generated attractive but highly volatile returns and ultimately landed in financial difficulty. In 1987, Sharon Steel entered [[Chapter 11, Title 11, United States Code|Chapter 11]] bankruptcy protection.<ref>{{cite news|title=Sharon Steel files under Chapter 11|agency=Associated Press|newspaper=Lakeland Ledger|date=April 18, 1987|access-date=May 4, 2014|url=https://news.google.com/newspapers?nid=1346&dat=19870418&id=u7cwAAAAIBAJ&sjid=qfsDAAAAIBAJ&pg=5861,942763}}</ref>

[[Carl Icahn]] developed a reputation as a ruthless "corporate raider" after his [[hostile takeover]] of [[Trans World Airlines|TWA]] in 1985.<ref name=IcahnTWA>[https://web.archive.org/web/20070219192854/http://www.time.com/time/magazine/article/0,9171,1590446,00.html "10 Questions for Carl Icahn"] by Barbara Kiviat, ''[[Time (magazine)|Time]]'', February 15, 2007</ref> The result of that takeover was Icahn systematically selling TWA's assets to repay the debt he used to purchase the company, which was described as "[[asset stripping]]".<ref>[http://www.stlmag.com/media/St-Louis-Magazine/October-2005/TWA-Death-Of-A-Legend/ TWA – Death Of A Legend] {{webarchive |url=https://web.archive.org/web/20081121150300/http://www.stlmag.com/media/St-Louis-Magazine/October-2005/TWA-Death-Of-A-Legend/ |date=November 21, 2008 }} by Elaine X. Grant, ''[[St. Louis Magazine]]'', October 2005</ref>

Icahn also attempted the grand prize of [[U.S. Steel]], launching a hostile takeover for 89% of the industrial giant for $7 billion (${{formatnum:{{Inflation|US|7|1986|r=1}}}} billion today) in late 1986, which was rebuffed finally by CEO David Roderick on January 8, 1987.<ref>[http://www.chron.com/CDA/archives/archive.mpl/1987_433681/icahn-drops-bid-to-acquire-usx.html Icahn drops bid to acquire USX]</ref>

[[T. Boone Pickens]]' hostile takeover bid of [[Gulf Oil]] in 1984 led to shock that such a large company could be raided. Gulf eventually sold out to [[Chevron Corporation|Chevron]] for a then-record $13.3 billion (${{formatnum:{{Inflation|US|13.3|1984|r=1}}}} billion today) "white knight" buyout.

[[Paul Bilzerian]] launched a number of takeover bids including [[Cluett Peabody & Company]], [[Hammermill Paper Company]], Pay n Pack Stores, [[Allied Stores]] and the [[Singer Corporation]].  All of his takeover bids were for all cash and for all shares and he refused any [[greenmail]].  Bilzerian was indicted for Schedule{{spaces}}13(d) disclosure violations and despite his claims of innocence he was convicted in 1989.  After spending thirty years fighting the government in his attempt to overturn his conviction, he renounced his US citizenship in 2019.

British raider [[Beazer]] also launched several successful hostile takeovers in the 1980s, the largest being that of [[Koppers]] in early 1988 for $1.81 billion (${{formatnum:{{Inflation|US|1.81|1987|r=1}}}} billion today).<ref>{{Cite news|last=Eichenwald|first=Kurt|date=1988-04-24|title=Takeover With a Twist |language=en-US|work=[[The New York Times]]|url=https://www.nytimes.com/1988/04/24/business/takeover-with-a-twist.html|access-date=2021-01-29|issn=0362-4331}}</ref>

Many of the corporate raiders of the 1980s were onetime clients of [[Michael Milken]], whose investment banking firm, [[Drexel Burnham Lambert]] helped raise [[wikt:blind pool|blind pool]]s of capital which corporate raiders could use to make legitimate attempts to take over companies and provide [[high-yield debt]] financing of the buyouts.

===Ronald Perelman and Revlon===
Drexel Burnham raised a $100 million [[wikt:blind pool|blind pool]] in 1984 for [[Nelson Peltz]] and his holding company Triangle Industries (later [[Triarc]]) to give credibility for takeovers, representing the first major blind pool raised for this purpose. Two years later, in 1986, Wickes Companies, a [[holding company]] run by Sanford Sigoloff, would raise a $1.2 billion blind pool.<ref>{{Citation |last=Bruck |first=Connie |title=The Predators' Ball: The junk-bond raiders and the man who staked them |location=New York |publisher=Simon and Schuster |year=1988 |pages=[https://archive.org/details/predatorsballthe00bruc/page/117 117–118] |isbn=0-671-61780-X |url=https://archive.org/details/predatorsballthe00bruc/page/117 }}.</ref> In later years, Milken and Drexel would shy away from certain of the more "notorious" corporate raiders as the firm and the private equity industry attempted to move upscale.

In 1985, Milken raised $750 million for a similar blind pool for [[Ronald Perelman]], which would ultimately prove instrumental in acquiring his biggest target: The [[Revlon|Revlon Corporation]]. In 1980, [[Ronald Perelman]], the son of a wealthy Philadelphia businessman, and future "corporate raider", having made several small but successful buyouts, acquired [[MacAndrews & Forbes Holdings|MacAndrews & Forbes]], a distributor of licorice extract and chocolate, which Perelman's father had tried and failed to acquire 10 years earlier.<ref name="RichardHackPage13">{{citation |title=When Money Is King |last=Hack |first=Richard |year=1996 |page=[https://archive.org/details/whenmoneyiskingh00hack/page/13 13] |publisher=Dove Books |location=Beverly Hills, CA |isbn=0-7871-1033-7 |url=https://archive.org/details/whenmoneyiskingh00hack/page/13 }}.</ref> Perelman would ultimately divest the company's core business and use [[MacAndrews & Forbes Holdings|MacAndrews & Forbes]] as a holding company investment vehicle for subsequent leveraged buyouts including [[Technicolor|Technicolor, Inc.]], [[Pantry Pride]] and [[Revlon]]. Using the [[Pantry Pride]] subsidiary of his holding company, [[MacAndrews & Forbes Holdings]], Perelman's overtures were rebuffed. Repeatedly rejected by the company's board and management, Perelman continued to press forward with a [[hostile takeover]], raising his offer from an initial bid of $47.50 per share until it reached $53.00 per share. After [[Revlon]] received a higher offer from a [[white knight (business)|white knight]], private equity firm [[Forstmann Little & Company]], Perelman's [[Pantry Pride]] finally was able to make a successful bid for [[Revlon]], valuing the company at $2.7 billion.<ref name="2.7Billion">{{citation |first=Richard |last=Stevenson |title=Pantry Pride Control of Revlon Board Seen Near |newspaper=The New York Times |page=D5 |date=November 5, 1985 |access-date=April 27, 2007 |url=https://www.nytimes.com/1985/11/05/business/pantry-pride-control-of-revlon-board-seen-near.html }}</ref>  The buyout would prove troubling, burdened by a heavy debt load.<ref name="PossibleBuyout">{{citation |first=Ann |last=Hagedom |title=Possible Revlon Buyout May Be Sign of a Bigger Perelman Move in Works |newspaper=[[The Wall Street Journal]] |page=1 |date=March 9, 1987 }}.</ref><ref name="RevlonProfits">{{Citation|url=http://findarticles.com/p/articles/mi_m0EIN/is_2005_March_8/ai_n11853855/ |title=Revlon Reports First Profitable Quarter in Six Years |access-date=February 7, 2007 |journal=Business Wire |date=March 8, 2005 |author=Gale Group }}{{dead link|date=May 2017 |bot=InternetArchiveBot |fix-attempted=yes }}.</ref><ref name="RevDebt">{{Citation |url=https://www.usatoday.com/money/companies/earnings/2005-03-08-revlon-usat_x.htm |title=Revlon profit first in more than 6 years |access-date=March 20, 2007 |newspaper=[[USA Today]] |date=March 8, 2005 |first=Cotten |last=Timberlake |name-list-style=amp |first2=Shobhana |last2=Chandra }}.</ref> Under Perelman's control, Revlon sold 4 divisions: two were sold for $1 billion, its vision care division was sold for $574 million, and its National Health Laboratories division was spun out to the public market in 1988.  Revlon also made acquisitions including [[Max Factor]] in 1987 and [[Betrix]] in 1989, later selling them to [[Procter & Gamble]] in 1991.<ref name="fu">{{citation |url=https://www.fundinguniverse.com/company-histories/macandrews-forbes-holdings-inc-history |title=MacAndrews & Forbes Holdings Inc. |access-date=May 16, 2008 |work=Funding Universe }}</ref> Perelman exited the bulk of his holdings in Revlon through an [[Initial public offering|IPO]] in 1996 and subsequent sales of stock. As of December 31, 2007, Perelman still retains a minority ownership interest in Revlon. The Revlon takeover, because of its well-known brand, was profiled widely by the media and brought new attention to the emerging boom in leveraged buyout activity.  Litigation associated with the takeover has also become standard reading for introductory business organization classes in most law schools, introducing what have come to be known as "Revlon duties" for boards of companies that are up for auction.

===Decline of the corporate raiders===
{{Original research|section|date=February 2023}}
In the late 1980s several famous corporate raiders suffered from bad investments financed by large amounts of [[leverage (finance)|leverage]], ultimately losing money for their investors. Additionally, with the fall of [[Michael Milken]] and the subsequent collapse of [[Drexel Burnham Lambert]], the credit lines for these investors dried up. By the end of the decade, management of many large [[publicly traded]] corporations reacted negatively to the threat of potential hostile takeover or corporate raid and pursued drastic defensive measures including [[Shareholder rights plan|poison pill]]s, [[golden parachute]]s and increasing [[debt]] levels on the company's [[balance sheet]]. Finally, in the 1990s the overall price of the American stock market increased, which reduced the number of situations in which a company's share price was low with respect to the assets that it controlled. By the end of the 1990s, the corporate raider moniker was used less frequently as private equity firms pursued different tactics than their predecessors. In later years, many of the corporate raiders would be re-characterized as "[[activist shareholder]]s", such as [[Carl Icahn]] during his 2008 profile on CBS's ''[[60 Minutes]]''.<ref>[https://www.cbsnews.com/news/the-icahn-lift/ The Icahn Lift: 60 Minutes' Lesley Stahl Profiles The Billionaire Investor], ''[[60 Minutes]]'', March 9, 2008.</ref>