Reginald Lewis: the deal heard 'round the world: his $985 million buyout of TLC Beatrice set...
By Dingle, Derek T.
Wednesday, June 1 2005
In 1987, a 44-year-old Wall Street attorney--armed with deal-making prowess and iron-willed determination--acquired a division of one of the nation's 500 largest corporations for almost $1 billion. The transaction was a crowning moment in business: it created the first black-owned enterprise to surpass the billion-dollar revenue mark.
The financial wizard who orchestrated that landmark deal was Reginald F. Lewis. His new entity, TLC Beatrice Foods Co., would go on to become a global conglomerate that controlled food and beverage manufacturers and supermarkets in 31 countries. In 1988, after reporting gross sales of $1.8 billion on the BE INDUSTRIAL/SERVICE 100, TLC Beatrice became the nation's largest black-owned business. It held the top spot for 11 years, growing to $2.2 billion in gross sales on our 1998 ranking.
That historic deal 18 years ago heralded a new era for black entrepreneurship and raised the bar for a generation of minority deal makers. Among the entrepreneurs Lewis directly influenced are Cleveland Christophe, managing partner of TSG Capital Group--which was No. 2 on the BE PRIVATE EQUITY FIRMS list last year--and Dumas Simeus, a former TLC manager who grew Simeus Foods International, a Texas-based frozen-food products manufacturer, into one of the nation's top black industrial/service companies.
Lewis, a Harvard-trained lawyer, gained his acumen for deal making in the '70s by helping minority firms get financing from MESBICs: SBA-sponsored venture capital firms run by corporations and foundations. In 1974, Lewis helped black investment hank Daniels & Bell complete a leveraged buyout of Cocoline Chocolate Co., the first such transaction by African American entrepreneurs (see "Travers Bell: Breaking Barriers on Wall Street" in the blackenterprise.com archives).
Eventually Lewis launched his own investment firm, TLC Group, which made history when it completed the $22.5 million acquisition of New York-based McCall Pattern Co., a sewing products and publishing operation. A shrewd financier, he sold the then-113-year-old institution for $90 million, netting a $50 million profit.
The McCall deal positioned Lewis to pursue much bigger game. He teamed up with Michael Milken, the junk bond impresario and senior executive of the now-defunct investment bank of Drexel Burnham Lambert, to acquire Beatrice International Foods (later renamed TLC Beatrice). To complete the $985 million leveraged buyout, Lewis used junk bonds. At the time, it was the largest offshore transaction in business history. Not only was Lewis the consummate deal maker, he was a brilliant manager who ran his sprawling empire, boosting revenues and shareholder value.
In 1993, Lewis died of brain cancer. His untimely death rocked TLC and stunned the business community. His half brother Jean Fugett briefly served as CEO before Lewis' wife, Loida Lewis, took the helm. Her rock-solid management bolstered TLC's performance over the next five years.
In 1998, the board decided to liquidate the firm and sell off its huge portfolio of assets to unlock shareholder value. Far from a distress sale, the orderly liquidation process, in fact, serried as another model of black wealth building and estate management.
But Lewis' legacy lives on. At the time of the TLC Beatrice transaction, he was labeled "the Jackie Robinson of deal making." Although the statement was meant to signify the milestone, Lewis was uncomfortable with the comparison. His response: "To carry around the notion that if I fail it's going to mean that no other black person will ever have a similar opportunity, or that if I succeed, it's going to open a floodgate of opportunity for other black Americans, misses the point. If our work is perceived as an indication we can function in a global, competitive situation, that's nice. But I've always believed that anyway."
As part of our 35th anniversary salute, BLACK ENTERPRISE presents Ultimate Wealth Builders--a monthly series profiling entrepreneurs, financiers, and corporate chieftains. Through innovative thinking, these men and women have had an immeasurable impact on the wealth-building potential of black Americans. For profiles of all of our Ultimate Wealth Builders, go to www.blackenterprise.com.