Ex-Chairman of Beatrice Mobilizes a Buyout Team

Donald P. Kelly, former chairman of Beatrice Co. and a near-legendary deal maker, has formed a new limited partnership designed to acquire businesses that can be bought for as much as $1 billion.

The investment firm Salomon Inc. will be a permanent partner to D. P. Kelly & Associates, arranging financing and finding investors for Kelly’s new pursuits, Kelly said Tuesday.

“We provide the managerial skills,” Kelly said. “We don’t have to worry about where we’re going to get the equity. They (Salomon) find it. . . . We aren’t involved with all the transactions they’ll do, but they’ll be involved with everything we do.”

Kelly said he wants to start another conglomerate from scratch, as he did with Swift meats in the late 1970s and early 1980s.

He renamed the company Esmark as it acquired and sold off companies ranging from personal care to industrial products to food and automotive products.

Esmark was acquired by Chicago-based Beatrice in 1984.

Less than two years later, Kelly acquired Beatrice in a $6.2-billion leveraged buyout backed by a New York investment firm, Kohlberg Kravis Roberts.

Dealt Out of a Job

The deal, the largest of its kind at the time, was financed by selling off almost all of the food conglomerate’s businesses.

Kelly, 66, said he left Beatrice because he ran out of things to do.

“There were no major acquisitions or dispositions to do, and for them to pay me the kind of money they were to sit in my office was ridiculous,” he said.

Kohlberg Kravis recently acquired RJR Nabisco in a $25-billion leveraged buyout.

Kelly said his plans are much more modest, but that Kelly & Associates might be interested in smaller businesses RJR may spin off after that sale is completed.

Seeking $1-Billion Deals

“We now happen to believe there are areas below the multibillion deal where we can build a company not too dissimilar to what Esmark did, and not too dissimilar to what Beatrice was,” Kelly said.

“I would say we’re looking for acquisitions in the $50-million to $500-million range without any problem, but we’re probably skewed more toward the $1-billion deal.”

Kelly retired as Beatrice’s chairman in August, although he still sits on the board.