LOOKING BACK ON TOBACCO ROAD PART IV
A SURPRISING OFFER
I returned to Business Planning in Winston-Salem. However, there was no immediate work for me. Today, someone in this position would be terminated. Instead, RJR gave me free rein to work on whatever project I believed worthwhile. This included some consulting with SeaLand on a ship construction project. I also revived my interest in the investment partnership that I had neglected while I was in New York (missing out on the bull market from late 1974 to mid-1976).
However, time spent at Aminoil was not in vain. It was a tough 14 months, but my financial evaluation skills improved, and RJR management learned that I was not afraid of hard work. April 1977, the Treasurer asked if I would manage the RJR pension and profit-sharing plans. This was an opportunity to learn the institutional investment business.
In the following seven years, we established RJR Investment Management internally. As RJR expanded through acquisitions, my duties increased and the private partnership also grew. My future looked assured – I would stay in this job I loved for another eighteen years, then retire, and run the partnership as a hobby. Or so I thought. A few months later, life took an unexpected disruptive turn.
Next: Part V - A Cookie Salesman brings a new corporate culture to RJR.
WHAT HAPPENED TO AMINOIL USA
Aminoil USA (Burmah) provided a good return to RJR. Much of this was the luck of entering and exiting the oil business at the right time. This does not diminish the achievements of Aminoil people. They adapted to the culture of a tobacco company and still ran the business well for twelve years. The original Aminoil New York management had told RJR that they could run Burmah well if RJR bought it. And they did.
The original purchase price of $522 million was the largest cash acquisition ever made at that point. Only the purchase of Montgomery Ward by Mobil Oil, a stock deal, had ever been bigger. Considering the mulit-billion dollar deals done today, the purchase seems trivial.
RJR sold Aminoil to Phillips Petroleum in 1984 for $1.7 billion. The return on the investment was 14.5% after tax.