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.Weill, Lane, and the Primerica management team weregreeted with wild cheering and applause when they met with thebrokers from Shearson. It was like the return of the conqueringhero, Lane says. They were standing up and screaming in theaisles.One broker, as I recall, stood up and waved the white flag.He said,  I ve left you several times and you keep buying me back.I give up.I ll stay! Another reason the deal made so much sense was that it solveda major real estate headache for Weill.Smith Barney needed to re-locate its headquarters because its lease on its Sixth Avenue officewas expiring in 1995. We knew that Shearson had excess space,so I told them that if this deal was ever going to make sense, nowis the time, Weill told a reporter.13 Smith Barney moved intoShearson s headquarters on Greenwich Street, just north of theWorld Trade Center.The Shearson space also had a superior com-puter and communications system in place.When Weill bought back Shearson, it was a vindication onmany levels.He had reclaimed Shearson from Robinson, Cohen,and all the others who had sent it into a downward spiral in thelate 1980s and early 1990s.The Economist noted in March 1993,just before the deal became official, that  If Primerica now gets ston_c07.qxd 4/16/02 8:53 AM Page 203203Back in the Big Leaguesthe broker [Shearson], then Mr.Weill will have proven himselfmightier and richer than Mr.Robinson.It would be nave tothink the point was lost on either of them. 14The deal wasn t just a symbolic victory for Weill.Despite itsproblems, Shearson still had an excellent core brokerage busi-ness.With the deal, Primerica picked up 9,000 Shearson brokers(Smith Barney had 2,400 of its own), 394 Shearson offices, and49 Shearson mutual funds with assets of $53 billion, as well asthe company headquarters.The new firm of Smith Barney Shear-son actually had more assets under management than MerrillLynch at that point.Right away, Weill and his management team set aggressivegoals for Smith Barney Shearson, announcing that the broker-age s goal was to raise average broker production to $500,000 ayear, from an average of $300,000 at Smith Barney and $260,000at Shearson.In June 1993, Weill lured Bob Greenhill away from MorganStanley and made him chairman and CEO of Smith BarneyShearson.A pioneer of the hostile leveraged buyout era of the1980s, Greenhill had steadily earned Weill s confidence withhis sage advice on big deals.Greenhill had advised Weill onPrimerica and Travelers considered by then superb invest-ments and advised him not to buy E.F.Hutton (the purchaseof which had sent Shearson into a funk for years).The idea be-hind Greenhill s hiring was that he could boost the investmentbanking division and lure blue chip clients like General Motorsand IBM away from Morgan Stanley.The New York Times notedthat Weill  displayed Mr.Greenhill like a trophy at a news con-ference announcing his hiring.15The spot for Greenhill at Smith Barney Shearson had openedup when Zarb, along with Robert Lipp, were promoted toexecutive positions with Primerica.Zarb would run the moneymanagement and life insurance operations, while Lipp would ston_c07.qxd 4/16/02 8:53 AM Page 204204KING OF CAPITALoversee consumer finance and Primerica s complicated invest-ment relationship with Travelers, then six months under wayand clearly developing.Weill opened up the purse strings for Greenhill, who was al-lowed to recruit high-priced bankers from his former firm andother prestigious houses to bolster Smith Barney s investmentbanking division. A lot of money was spent on bringing in Mor-gan Stanley people, says a senior Citigroup executive. ThenSandy found out that the best people were still Smith Barneypeople.The Morgan Stanley people were there for their own per-sonal benefit more than the organization as a whole.In mid-1995, two years after Greenhill and his dozens ofbankers with lucrative contracts had arrived, Smith Barney wasstill a minor player in stock and bond underwriting.To makematters worse, even as Smith Barney was doling out as much as$50 million each year in guaranteed contracts to the formerMorgan Stanley bankers, the original Smith Barney team re-ceived smaller bonuses than before the new bankers had ar-rived.Throw in small, but telling episodes like the MorganStanley veterans flying first class on the same flight as SmithBarney bankers flying coach, and Smith Barney had a culturalwar on its hands.The internal battle manifested itself in several ways, both largeand small.In early 1994, Smith Barney was hired to handle a $750million RJR Nabisco stock offering, but could only sell $250 mil-lion of the issue, a debacle that landed on the front page of theWall Street Journal.Greenhill staffed and then shut down SmithBarney s Hong Kong operations, all within one year.Bankers withSmith Barney roots were initially left out of Greenhill s Mondaymorning strategy sessions.On January 10, 1996, the Greenhill era came to an end atSmith Barney.He resigned after it became clear that Weillwanted Dimon to step up from his COO position and run Smith ston_c07.qxd 4/16/02 8:53 AM Page 205205Back in the Big LeaguesBarney himself.Yet Weill and Greenhill remain friends today. You would think that after going through all that, Sandy wouldbe pissed off at Bob Greenhill, but that s not the case, says asenior Citigroup executive. Bob has his own prestige.Completing the Travelers AcquisitionAs a board member at Travelers, Weill made it clear from the out-set that he felt the insurance company was not using its assets aswell as it could.He urged Travelers to cut costs, throwing his sup-port behind a plan to save Travelers $100 million by eliminating5,000 jobs by mid-1994.Ed Budd, then Travelers CEO, says hewelcomed Weill s input. My impression was that here is a very as-tute, analytical businessman with good sense of risk and reward,who brings a fresh approach outside of the insurance industry,he says. It was refreshing to hear questions from his perspective.The thought of fully capturing Travelers was never far fromWeill s mind, and he wanted the company to be in decent shapewhen it happened.With the support of Weill and the rest of theboard, in 1992 and 1993 Travelers sold numerous real estateproperties. We listened very carefully to everything he had to say, saysBudd. Once Sandy saw the company and its attributes from in-side, he liked it even better.And the board felt that if we saw syn-ergies that were valuable, we would do it.In September 1993, just months after acquiring Shearson,Weill made his move and offered to buy the remaining portionof Travelers Primerica didn t already own for $4.2 billion.Weillbecame leader of the merged company, which assumed the Trav-elers name.The deal was largely aided by the rise in Primerica sstock, which had shot up in seven years from about $20 to $100 ashare.The Travelers board approved the merger on September23, 1993.Weill s insider status and presumed knowledge of ston_c07.qxd 4/16/02 8:53 AM Page 206206KING OF CAPITALTravelers operations had paid a huge dividend.On October 25,Forbes noted the  Sandy Weill premium, meaning that investorswere willing to pay more for the stock, purely because Weill wasat the helm.16Budd became the next in the long line of executives who werenudged into retirement by a merger with a Weill-led company [ Pobierz całość w formacie PDF ]