THE BANKS RUSH IN WHERE REGULATORS FEAR TO TREAD
When Philip Morris set out to acquire General Foods in 1985's
biggest M&A deal, two members of its treasury department did some
preliminary scouting. They telephoned 50 banks to arrange a $6 billion
credit before the Morris board came to rubber stamp the takeover. They
corralled 12 of the largest banks in the US and seven Japanese banks,
which committed from $50 million to $350 million each.
But the deal did not stop there. Within weeks, many of the banks
had sold off portions of their loans to other financial institutions,
skimming a few points off in the process as a fee for their trouble.
The buyers were, invariably, the US branches of foreign banks. As a
result, banks on the periphery of Morris's financial vision, such
as the Bank of Scotland, Kyowa Bank, and the Hokkaido Takushoku Bank
ended up...
