The Reincarnation of Peter Cohen
The RJR dealmaker is back, savoring the fruits of an Olivetti strategy he helped set up
As the former chief executive of Shearson Lehman Hutton Inc., Peter A. Cohen knows a thing or two about history-making takeovers. In 1988, he helped ignite the $25 billion battle for RJR Nabisco Inc., the ugliest corporate tussle ever to take place in the U.S. Over a decade later, when his old Lehman Brothers Inc. friend Ruggiero Magnoni phoned from Milan in late February, Cohen had a chance to be in on another piece of history. Magnoni told him that Italy's scrappy Olivetti was readying a $60 billion hostile bid for telephone giant Telecom Italia--which would be the biggest European takeover ever attempted.
Cohen, a longtime Olivetti director, had just enough time to catch the last flight from New York to Milan for an emergency board meeting to approve the offer. Later, a jet-lagged Cohen and other members of the management team celebrated the audacious bid in a nearby restaurant. As the dinner was ending, an ebullient Cohen approached Magnoni, a 48-year-old Milanese financier and the key banker on the deal. "Ruge," said Cohen. "This is your RJR."WALL STREET PARIAH. If they're lucky, Magnoni and Olivetti will fare better than Cohen and RJR Nabisco did. RJR Nabisco was nearly destroyed by debt, and Cohen's botched bid attempt made it his personal Waterloo. Barbarians at the Gate, the best-seller about the deal, painted Cohen as a thuggish and arrogant dealmeister who symbolized a greedy, out-of-control Wall Street. Right after the RJR debacle came Cohen's devastating fall from grace: He was forced out of Shearson, the financial colossus he had created. Shortly after his exit, Shearson announced $1 billion in losses. Overnight, the Master of the Universe was a Wall Street pariah. "I was fired on the front page of The New York Times," he says.
Now a humbler, somewhat bitter, yet seemingly wiser Cohen has reemerged with a far more positive story to tell. Cohen says he isn't officially advising Olivetti on its bid for Telecom Italia. But he does take credit for persuading Carlo DeBenedetti, former head of Olivetti, to make a $152 million investment in 1988 in Omnitel, an Italian cellular-phone business that is now worth about $10 billion. Olivetti's plan is to sell Omnitel and other telecommunications interests to provide the equity for Olivetti's $40 billion bid for Telecom Italia. "The story is that things that were done 10 years ago set the stage for this deal," says Cohen, referring to his role. While DeBenedetti wouldn't comment, his son confirms Cohen's claim. "The first person to put cellular on the table was Peter," says Rodolfo DeBenedetti, the eldest son of Carlo and managing director of the family's Milan-based investment company.
Cohen has also come to terms with his traumatic loss of power and prestige. Cohen, who blames his bitter divorce on stress from job woes, is set to marry Brooke Goodman, mother of his 1-year-old daughter. And he has quietly established his own investment business, Ramius Capital, where one of his partners is former Salomon Brothers President Thomas Strauss. Ramius, named after the renegade captain in The Hunt for Red October, has 25 employees and manages about $500 million.
Cohen has even made peace with the man he once blamed for his fall: James D. Robinson III, ex-head of American Express Co., which owned Shearson. Despite Robinson's sacking of Cohen, he's now an investor in a Ramius partnership. "Peter was very smart in the ways of Wall Street, and I'm delighted he's doing well," says Robinson, who now runs an Internet venture-capital firm.
Cohen's Italian connection dates to 1983, when Shearson bought Lehman Brothers. Cohen, the chief executive of Shearson, inherited Lehman's historic roster of relationships with Italian companies such as Fiat, Banca di Roma, and Olivetti. By the early 1980s, the New Yorker was a regular visitor to Italy, was studying Italian, and even launched an Italy Fund.
Cohen still savors his Italian glory days. One 24-hour stint in Italy in the mid-1980s, Cohen recalls, began with lunch outside Turin at the sumptuous mansion of Fiat patriarch Gianni Agnelli. Cohen then flew across Italy--in a Gulfstream lent to him by Olivetti Chairman Carlo DeBenedetti--for dinner in Ravenna with agrochemicals magnate Raul Gardini. The next morning, he flew to Rome for lunch with tire chieftain Leopoldo Pirelli before hopping back on the plane for supper in Milan with DeBenedetti. "We had deals going with more or less all of them," says Cohen.
But none would be more important for Cohen than DeBenedetti. Ten years Cohen's senior, the Turin-born engineer walked away from the top spot at Fiat in 1976 after just 150 days. He then bought failing typewriter maker Olivetti and magically transformed it into Europe's leading computer manufacturer. DeBenedetti was shaking up the staid business culture of an entire continent--the way Cohen was on Wall Street."ON A FAMILY LEVEL." By the mid-1980s, Cohen and DeBenedetti were deeply entwined in joint business deals, from fund-management companies to real estate ventures. But they were also fast friends who were linked by their shared Jewish background: DeBenedetti would talk to Cohen about how he had narrowly escaped the Nazis in World War II. Back in New York, Cohen not only found a job in Shearson's mergers unit for DeBenedetti's son Rodolfo but also arranged a stint at New York's Mt. Sinai Hospital for son Edoardo, who had just become a doctor. Marco, DeBenedetti's middle son, was employed at Wasserstein Perella & Co. "We were all very close, on a family level, with Peter," says Rodolfo.
One DeBenedetti trip to New York to see his sons in 1987 was especially momentous. Discussing Olivetti's future with De Benedetti while walking down Fifth Avenue on a rainy March afternoon, Cohen suggested that Olivetti make a bid for a license to operate cellular phones in Italy. "I'm a computer company, not a phone company," replied DeBenedetti. "No," said Cohen. "You're a computer assembler, and the economics are turning against you." Cohen then arranged for DeBenedetti to meet with George Blumenthal, then chairman of Cellular Communications.
Within months, DeBenedetti gave the green light for Olivetti to launch a cellular-phone unit, Omnitel. Lehman took an interest in the joint venture, later putting up $4 million. Omnitel began to grow explosively once the Italian government allowed it to operate in 1994, and that gave Olivetti a new lease on life. In 1995, Lehman sold its stake for $250 million. "Omnitel was Peter's idea from the beginning," says Lehman's Magnoni, who helped structure the original deal. Cohen is still close to Olivetti's new chief, Roberto Colaninno, a DeBenedetti lieutenant, and Lehman's Magnoni, who is a Cohen protege.
The swagger that once made Cohen a poster child for Wall Street arrogance is long gone. Pin-striped suits have given way to casual knit shirts. The only reminders of the Cohen who was Wall Street royalty are his ever-present cigar and photos in his Manhattan office, like one of him and Margaret Thatcher. A devoted father, he dotes on his two grown children and infant daughter.
Cohen's Street savvy is clear from his eclectic mix of investments. His firm aims for steady returns in the 12% range from merger and convertible-bond arbitrage, buying and selling distressed securities, and making markets in a few NASDAQ stocks such as Yahoo! Inc. and Amazon.com. Ramius also owns some multifamily-unit dwellings in New York City's Queens and the Bronx, and is building a 320-unit building in Hoboken, N.J. Cohen is an adviser to Foamex Intl., a struggling polyurethane-foam maker. Cohen even has a hand in expanding a little New York take-out restaurant chain called Hale & Hearty Soup. "It was like a death, what happened," he says. "But I'm still young, and there's lots I want to do." At least on Wall Street, there is life after death.By John Rossant in Rome, with Leah Nathans Spiro in New YorkReturn to top