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Ron Perelman

Ron Perelman, one of the wealthiest men in America, sits down for his first ever Q&A.
Marvin R. Shanken
From the Print Edition:
Ron Perelman, Spring 95

(continued from page 1)

Shanken: All the stories I've read about you have a lot of information, but they're never in first person. I'm flattered and honored.

Perelman: It's a pleasure to be here. I've always been afraid of the press. My point of view is that the press could never do me any good, just a lot of harm. And as a result, I just tried to avoid the press. Then we got to a point where that was impossible. I've finally come out of the closet a bit.

Shanken: Let's get right into the interview. It's very unusual for someone to buy a company, sell the company and then buy the same company back, as is the case with Consolidated Cigar Corporation. It's particularly novel when we're talking about a product like a cigar, which is so personal to you. Could you tell us why you acquired Consolidated, why you then sold it and why you decided to buy it back?

Perelman: It's actually very simple. We first saw the company when Gulf & Western owned it. I had negotiated with Charlie Bludhorn and Martin Davis. We reached all the economic points of agreement, but the deal fell apart on technical issues, such as the representations and warranties that we had wanted from Gulf & Western, and that they were reluctant to give. [Consolidated] then ended up being sold in a management buyout. This management group ran into some real personality issues among themselves and ended up in serious litigation, with [Consolidated] suffering because of the lack of a focused manager. I reached out to one of the management group to see whether they'd be interested in selling. Of course they said yes, and we very quickly negotiated a transaction.

Shanken: Did you want to buy Consolidated because it was a business that held a lot of potential for growth or was it because it was a cigar company?

Perelman: I have stayed away from buying companies that I don't think I'd enjoy owning. That's from the point of view of having a product that I think makes people happy or a product that does some good or a product that is just fun and interesting to own and operate. And Consolidated Cigar fit all that. It's a company that I thought had an enormous amount of potential but also had a product that I thought brought people a lot of pleasure. It's also a product that I've got some identification with because I'm such a strong smoker. We bought it, and Theo Folz, who is currently the chief executive officer, was wooed away from another company to join us, and he's done a fabulous job. Then it reached the point where I thought that from a financial point of view we were offered a very attractive price for the company, and I agreed to sell it.

Shanken: Was it for sale?

Perelman: No, it wasn't for sale.

Shanken: An investor came to you and said we'd like to buy your cigar company?

Perelman: The LBO funds were very flush with capital, they needed to do transactions, and they were paying up for transactions. And from a financial point of view, the deal was an interesting transaction. But I still really liked the company and really liked the product, so that when I heard that they wanted to sell it again out of the LBO fund, we approached them and said we have serious interest, and in very short order, we negotiated a transaction and bought it back.

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