Custom «Problems Lewis Faced in Beatrice Deal» Essay Paper Sample
During the TLC Beatrice international deal, this was to cost Lewis a lot of money and it was putting him under financial constraints. To tackle this, Lewis and his colleagues at TLC Group very fast put together the first bid at $ 950 million and made the submission to Beatrice. Consequently, they worked together to ensure there is financing for takeover and Lewis was assisted by people who were apparently impressed by how Lewis handled McCall company. In November, the deal was cemented and the ultimate price was $985 (Lewis & Walker, 2005).
In 1987, Lewis purchased Beatrice International Foods. He bought if from Beatrice Company for $985 and renamed it TLC Beatrice International. It was a snack food, beverage as well as grocery store conglomerate which was the biggest African-American owned business within the United States. Lewis managed to finance the business deal by seeking financial assistance from the Maverick Investment bank. For Lewis to lower the total sum required in financing LBO, he established a plan whereby he sold off some of the division's assets with instantaneous takeover. For the year ended 1987, TLC Beatrice had made a revenue of $1.8 billion and it by then it was the first black-owned company to make more than $ 1 billion within yearly sales (Lewis & Walker, 2005).
Basically, TLC Beatrice International had some debts which were required to to be settled for the company to operate smoothly. Lewis being the chairman and the CEO for TLC Beatrice International, acted fast to reposition the company, pay the debt the company had and also immensely increase the value of the company. In 1992, the company had already sold over $1.6 billion. This was a major step for Lewis regarding the management of the Company. Reconstruction of a company with a lot of debts from scratch and management of such a big company with different branches worldwide; calls for ambitious, determined and practical manger for such remarkable developments (Lewis & Walker, 2005).
By late 1989, Lewis had sold further $438 million within TLC Beatrice assets and this included all its Latin American units as well as of its Asian units. However, Lewis ensured that Bireley's bottling branch running its activities in Thailand was not sold. This pared the company's down to about $100 million and its proceeds to $1.1 billion annually. With approximately fifteen units and about seven thousand workers, TLC Beatrice was by that time principally Western European firm. The company's main operation was the Franprix, which was the biggest wholesale supermarket distributor within the Paris metropolitan area: others consisted of several European ice cream manufacturers, a snack food marker which was located in Ireland, soft drink bottling business within Europe as well as the one in Thailand (Lewis & Walker, 2005).
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Lewis made an application to the Securities and Exchange Commission with the intention of selling 35 percent of TLC Beatrice common share to the public and this was in November 1989. However, there was a depressed market for the IPOs and also there were investor concerns regarding the large amount of money Lewis would get from the offering. According to fortune, about a quarter of billion dollars, and possibly at the cost pf common shareholders ruined the IPO offer. This was a major blow to Lewis and the company. In 1991, Lewis critically considered trying another IPO, but decided otherwise since he suspected another IPO failure would take place (Lewis & Walker, 2005).
Under the leadership of Lewis, the peak of TLC Beatrice Company came in 1990. In this year, the company registered a sales increase of about thirty one percent to about $ 1.49 billion. After a year, the annual net income was tripled which turned out to be $45.6 million. In spite of this success, Lewis who was regularly being accused that he was more interested and concentrated in making deals and concentrated less in running the companies made numerous attempts to get hold of other businesses within the late 1980s and early 1990s as well. Most of these companies were non-food and they were located within United States. The main aim of Lewis was to get a hedge against fluctuations within European economies and economies as well (Lewis & Walker, 2005).
Nevertheless, these deals never came to pass. Among the main bid that Lewis targeted while making the bids were AmBase, an expanded financial services organization; the remaining domestic business operations of the TLC Beatrice Company in addition to Scovill Apparel Fasteners Group, a maker of zippers. Lewis also made serious considerations but did not trace bids for Capital markets Assurance Corp and Baltimore Orioles baseball team. According to this book, KKR refused the bid from Lewis for the stripped-down Beatrice even if Lewis's offer was higher than the $1.3 billion which ConAgra paid. KKR completely refused to acknowledge Lewis' bid. Lewis triumphed over this by not letting this demoralize him but by working extra hard to be more successful in his business (Lewis & Walker, 2005).
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While still operating TLC Beatrice, Lewis faced ethic problems. He was operating the business in the midst of the white who perceived themselves as being the most successful in that field and viewed the blacks as less effective. For example, he was on the Black Enterprise magazine as the owner of the largest black-owned company within the United States. He often faced stiff competition from the white investors who had an upper hand in investments by then. In 1988, Lewis informed the Black enterprise that black Americans entrepreneurs could aim higher and that sky was the limit for him. For him, his experience as a black American in the nation assisted him in knowing that achievement comes through hard work and hence he had to work really hard (Lewis & Walker, 2005).
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