Loida Nicolas Lewis: From Cheerleader to Coach

How one Filipina steered the course of one of the most successful business enterprises in America

By Regina Balane

One blustery morning in December 1993, the board of directors at TLC Beatrice International Holdings Inc., a conglomerate of 64 companies in 31 countries, gathered for an emergency meeting at the firm's Manhattan offices. After six straight years of strong growth, the nation's largest African-American owned conglomerate was floundering. Europe, where most of its businesses were located, was in its worst recession in decades. The competition was gaining ground. Shareholders were getting impatient, urging the board to make the company public.

After that meeting, Loida Nicolas Lewis was elected to assume the position as TLC's chairman. With that announcement, a saga began, which, when it was over, would see a business empire go beyond its original ambition and give its investors more profit than they had ever expected.

Ironically, the announcement was greeted with skepticism. Only six years earlier, Loida Nicolas Lewis’ late husband, former chair and CEO Reginald F. Lewis, had catapulted the company to the Black Enterprise Industrial/Service 100 List -- the first African-American owned enterprise to exceed the billion-dollar mark.

In a country as race conscious as the United States, Reginald Lewis had hurdled obstacles that would have discouraged other investors from minority communities. A relentless visionary, he was by 1991 in Forbes Magazine’s list of 400 wealthiest Americans. By the time of his untimely death, in January 1993, TLC Beatrice, earning revenues of over $2.5 billion, had made him the wealthiest African-American in the country.

But his work had only just begun. He left behind his widow, Philippine-born Loida Nicolas Lewis, and two daughters, Leslie and Christina. How Loida Nicolas Lewis steered the company to achieve Reginald's vision -- and to go beyond everything he had imagined -- is a story in a way similar, yet remarkable and unique on its own.

“Reggie was my best tutor,” demurs Loida, crediting her business savvy to the fact that she paid “one hundred percent attention” to her husband.

But Reynaldo P. Glover, a classmate from Harvard Law School who introduced them on a blind date 30 years ago, and TLC Beatrice's executive vice president and general counsel, says, “Loida was unassuming and laid back but educationally and intuitively brilliant. Reg was incredibly brilliant. They were both brilliant. They were soulmates. It was a terrific team.”

Both super-achievers, their partnership set the stage for what was to be a series of record-breaking milestones in the history of African-Americans and Asian-Americans. Reginald graduated from Harvard Law School after being admitted without taking the entrance exam. Loida graduated from the University of the Philippines, passed the bar, and after settling down in New York, passed the New York State bar, the first Asian American woman to do so without having studied law in the U.S.

As working spouses, they pursued their law careers differently. She worked for Manhattan Legal Services, focusing on the problems of an underprivileged client base in East Harlem -- unemployment insurance, social security, discrimination, housing. Later, she worked as General Attorney for the Immigration and Naturalization Service for ten years. She left the INS in 1988, when her husband decided it would be better to manage the various companies owned by TLC Beatrice in Europe, and moved the entire family to Paris.

In her meetings with various business units in Europe and her speeches before organizations, universities and schools, Loida always stresses that Reginald encountered a string of setbacks at least three times before he finally met with success. After the third setback, she could see that he was close to giving up. A quiet presence, she always provided reserves of energy and strength for him. “I was the cheerleader, urging him on,” she says.

Before moving to the investment side, Reginald was a corporate lawyer for the Minority Enterprise Small Business Investment Companies, a venture capital. It was an experience that would set the foundation for his later success in takeover deals. But shortly thereafter he began to grow disenchanted with the vicissitudes of this area of law practice. Tired of the way clients dismissed his services apparently on a whim, he decided to leave his law practice and do corporate acquisitions on his own. “This is not the way I want to spend the rest of my life,” he told himself. “I’ve got to go to the other side of the table.”

It wasn’t going to be that easy. But after years of intricate negotiations that would boggle the mind of the most skilled thriller author, he was able to acquire what would be the flagship of a successful business empire: TLC Beatrice International.

Reginald Lewis always believed that hard work and dedication took a person where he wanted to go. He also believed that talking about a deal during its early stages could jinx the deal, and so he couldn't discuss it with anyone. The one person he talked to was his wife Loida.

Expecting to be just the owner, he ended up managing the company. He uprooted his family from New York, moving to Paris in 1988 to be closer to all the plant facilities and operations. His energy was relentless, flying the company jet in and out of Paris, London, Dublin, Barcelona, Milan, Brussels and Grand Canaria. Close associates all had trouble keeping up with him, and no one looked forward to joining these frequent trips to visit Beatrice plants and meet key managers and minority shareholders.

But by 1993, his relentless energy would take its toll. “(Reginald) worked on Beatrice for five years until he was diagnosed with brain cancer,” recalls Loida. “In six weeks he passed on. It was devastating. I was catatonic, living on automatic pilot. But I kept the faith, and in the darkest of nights, I just reached out and said, Lord, you have to help me.”

His death left the board of directors, officers, employees and shareholders through a great deal of turmoil. Glover recalls: “That is what happens when you take an icon like Reg Lewis away from a conglomerate like TLC Beatrice. Shareholders were getting restless and employees had lost their shining bright light.”

Soon, news about his flagship company was sobering. By September 1993, TLC Beatrice was in trouble. Europe’s prolonged recession cut into the company’s earnings since almost all of its businesses were based there. Several shareholders, believing it was the only way to make a quick exit on what they thought was a great investment turned bad, demanded that the company be taken public.

“By the end-1993 the company was losing money,” recalls Glover. “There was organizational confusion with respect to its purpose and destiny. You pull out an icon like Reginald F. Lewis out of a business, a vacuum is created.”

Such a colossal figure could not be replaced easily, not even by his widow - or so most people thought. “She was not immediately accepted,” adds Glover. “Managers of the business units across Europe accepted her eventually, but not until she was tested.”

But it would not be long before everybody realized how appropriately his widow filled his shoes. Armed with entrepreneurial talents, matched by legal acumen, negotiating skills and a sincere concern about the people “behind the numbers,” as well as years of experience as a lawyer servicing underprivileged communities in Manhattan and the INS, Loida Nicolas Lewis was going to prove she had not just her husband's talent, but a management style all her own.

When she took over TLC Beatrice International, she immediately assessed the situation and asked herself, “What do I have here? What did my husband leave behind?”

She knew she had to complete the work he had left behind and finish it the way he would have wanted it. She was so certain of this goal and how profoundly personal it was, that she could not take the risk of letting anyone else run the company.

Each morning, she took ten minutes to take stock of the day, meditating and reading passages from the Bible. These moments of contemplative silence helped her collect her thoughts before she proceeded with a full day ahead of her.

Company operations were overseas, requiring her to travel a great deal. The five years her entire family lived in Paris made her familiar with the nuances of doing business in Europe. She chose not to duplicate the frenetic pace with which Reginald oversaw the company. While he blitzed through several cities in a single day, squeezing in an hour or two to meet managers and walk through various plants, she spent more time getting to know the business intimately.

She would spend half a month in Europe, maintaining residence in Paris as her base. She quietly observed operations to familiarize herself with the circumstances and the people “behind the numbers.” In France, she would spend a day in various Franprix and Leader Price grocery stores owned and managed by TLC Beatrice, observing customers in the supermarkets. Like her husband, she too was obsessed with what produced the numbers that kept sales and profits flowing in. She took his management style one step further, however, devoting her time not just to managers and key personnel, but also the staff: the door keeper, the beverage mixer in Belgium, the French sales crew, the Spaniards who supervised the peeling of oranges for the famous ice cream cups of Helados La Menorquina, the Irish ladies who peeled potatoes for the Tayto potato chip plant in Dublin.

Her guiding principles have always been prayer, goal-setting, and obedience to an inner code of conduct. In business dealings, her golden rule is simpler and more time-tested: Do unto others as you would have them do unto you.

“She was not just a wonderful wife. She was the business partner of Reginald F. Lewis,” says Gerry Schwartz, who heads the Toronto-based firm Onex, which bought the Canadian business from TLC Beatrice. “She understood his strategy. It's her family's money at stake. She understands the business. Why shouldn't she step in and run the company?”

“The first year was very challenging,” Loida says. “It was basically putting out fires. We put our shoulders to the yoke, and we worked hard.”

With a holding company headquartered in Manhattan, she managed the diverse conglomerate by way of consensus. She regularly communicated with everyone so that they all knew and understood her vision for the company. “At the macro level my goal was to maximize the value of the company,” she says. “At the micro level, I was the cheerleader. My husband had a forceful personality, and my role when he was alive was to constantly cheer him on and so it was a natural for me to be cheerleader to my managers.”

Armed with a remarkable fluency in Spanish and French, she was keen on adapting to the local habits and customs of the countries where TLC Beatrice still had extensive operations.

“I was fortunate that throughout the Beatrice years, Mr. Lewis saw to it that I met all of his business associates,” she says. “My transition to chairmanship was not rocky in terms of acceptance. A lot of goodwill for my husband passed on to me when I took over.”

Backed by seasoned senior managers in New York and the local CEOs managing the business units in Europe, she created an executive management team, surrounding herself with old friends and associates of her husband.

It was quickly becoming evident that a new kind of leadership, equally driven and equally focused, was underway. Immediately after the board elected her as chairman in December 1993, when her consultants told her it was impossible, she was able to raise $20 million in bridge loans to stem the company's cash flow problem. When she decided it was appropriate to sell the corporate jet, no one believed that her prospective buyer could source the funds to close the acquisition. The buyer came up with the money and she sold it for $14 million. She also moved the headquarters from the entire 48th floor to one third its size on the 39th floor and, with generous separation pay, she dismissed half of the corporate staff.

All these moves reduced corporate overhead by fifty percent. In July 1994, when she formally assumed the post of CEO, she reviewed the operations of all the business units and initiated a corporate austerity program, disposing non-core assets and non-performing or sub-par business units.

“We sold the operating units that were losing money. But we had to determine which were the businesses we had to maintain, and retain as the core units. Once we did that, we had to study how to manage the core businesses better. We redefined the mission for the company, in order to redirect the business to achieve its maximum potential.”

From its debt of $350 million, which she inherited when she assumed office at TLC Beatrice, the company soon had a long-term capital structure that was manageable and affordable. All these aggressive moves stabilized the company and enabled her to execute plans for growth and expansion

Recalling a letter Reginald once wrote to Colonel William Smith, Jr. of New Jersey in July 1987, in which he stated, "I continue to believe quite strongly that maintaining a low profile is the best strategy for achieving good results,” she declined interviews with the media until November 27, 1994, when the New York Times ran a full-page feature on her. In that article, reporter Tony Chapelle narrated that David Wells, an analyst at Bear Stearns, had estimated the market value based on cash flow of TLC at $729 million.

Loida Nicolas Lewis insists that her primary concern is to enhance the business to maximize returns for shareholders. “My husband was not in the business of creating an empire,” she says. “He was in the business of creating wealth.”

Her hard-nosed approach to business was coupled with a keen interest in the people behind it. She kept in touch not only with the people who generated the numbers in the office and plant sites, but all the way down to the janitor who kept the plant floors clean.

“People make the business,” she says. “The moment a company loses touch with employees and customers, that company suffers.”

During his time, Reginald Lewis gathered all the managers and CEOs of the local business units all across Europe together once a year to meet and discuss the business.

“When I took over, I turned that annual gathering into a semi-annual one,” says Loida. “The founding entrepreneurs, who held the minority interests in our business, came from generations of fathers and sons. We brought them all together twice a year. The potato chip plant manager from Ireland appeared to have nothing in common with the ice-cream maker from Spain or the beverage plant manager from Belgium.”

But she was aware that they did have something in common, one unifying element in their diversity. They were all people. They were the ones managing the local business units to get TLC Beatrice to achieve its overall goal. They were responsible for supervising people, be it in the plant sites and factories, selling TLC Beatrice products and services to customers who themselves were also people. She could move effortlessly from one group to the next, chatting in Spanish here, and moving on to have her coffee with the French, asking them about how things were in their own language. In this way she was able to act as the bond that glued them all together.

“They all related to one another. At times, the ice-cream maker would call on Vincent of Tayto in Ireland, to ask him how he would handle a particular situation he was facing in the plant.”

It was the small courtesies and amenities that went with it that made all the difference in the world. She kept everyone going with short inspiring talks, making everyone around her feel that they were uniquely special and that she cared for them. She would call managers and board members on their birthdays. In the office, she would have a birthday cake for the staff to share on a colleague’s birthday.

That quality of caring was infectious, and it spread all throughout the organization and kept morale strong. Be it in the midtown Manhattan headquarters or the beverage plant in Saint-Alban-les-Eaux in France, everyone seems to have some fond memory of her. She always found time to pause in between a rigorous schedule of walking through a plant facility in Dublin to chat with the Irish ladies who peeled the potatoes for Tayto potato chips.

“We were crunching numbers and analyzing figures off balance sheets and income statements in the New York office while she was spending time with those who brought in the numbers,” says Glover.

In between her visits to Europe, she also took time for a nationwide swing promoting a book about her late husband's life and accomplishments, entitled “Why Should White Guys Have All the Fun? How Reginald F. Lewis Created a Billion Dollar Business Empire.” It sold several hundred thousand copies.

She paid back her employes’ loyalty and hard work with fairness and opportunity. When the time came for the company to sell a business unit, she always wanted to give the founding entrepreneurs who had the minority interest a fair crack at submitting a bid. As was the nature of the business, in a few instances, it became a struggle merely to bat for the highest degree of fairness throughout the negotiations.

One such incident happened in 1999, when the company decided to sell Tayto. Loida wanted Vincent O'Sullivan, their long-time manager, to be given a fair opportunity to buy the business. He tied up with a major investment bank and submitted his bid. In the meantime, the company's advisers had another buyer, Cantrell & Cochrane, an Irish snack firm waiting in the wings, who presented a higher bid.

The company decided to sell to Cantrell & Cochrane. She flew to Dublin to close the deal. Shortly after that, Glover recalls, a senior manager anxiously reported that Mrs. Lewis would not sign the contract.

“Vincent just came in with a bid that is a million dollars higher,” she had told him. “He had not been given a chance and that was not fair.”

Through all this, the company's advisers were tearing their hair out trying to get Loida to sign the contract. Cantrell & Cochrane's CEO wanted to have a word with her in an effort to persuade her to close the deal in his favor.

During that meeting, he told her that twenty years ago, when Beatrice wanted to sell Tayto, he wanted to buy the business, but the owners decided to sell it to Kohlberg Kravis & Roberts. Then he heard that Beatrice International was being sold. He wanted to buy Tayto, but Reginald F. Lewis beat him to it. And now, she was selling the business again, and his bid was being rejected.

Loida told him that she would not close the deal with him until O'Sullivan was treated fairly. This was how the new owner of Tayto struck a deal with Vincent O'Sullivan, who for decades managed the business to growth. With TLC Beatrice, he had a 2% equity. With the new owner, he was given a 15% equity by the buyer.

At this point, the buyer went back to Loida, certain that the terms were more than enough to prove to her that Vincent was being treated fairly. But that was not all. She also asked him to top Vincent's bid by another million dollars. He agreed, and the deal was closed.

She then recommended to the board that the $1 million be set aside and divided among all the employees of Tayto, not according to rank, but according to years of service. This to her was the best way to make sure that everyone, including the ladies with whom she spent time during her numerous visits to the factory, would receive some of the proceeds of the sale.

“There were people who had been with the business for more than 40 years,” she says. “There were a few women who were there when the business first started, manually peeling the potatoes, slicing them and actually frying them to produce the potato chips. I wanted them to get their fair share.”

Such acts of kindness were not to be taken as a weakness, however. Says Glover, “She is no pushover. Beneath that soft exterior was a lady that was tough as nails.”

Tough, as well as eerily prescient. In 1996, a leading investment bank was commissioned as financial advisor for a planned Initial Public Offering. Their lengthy analysis led them to conclude that TLC Beatrice International should go public at $24 a share. But Loida found the price unacceptable. At the core of TLC Beatrice's was a crown jewel -- the wholesale and retail operation Franprix. In 1992, their French partners created a concept of a convenience store they named Leader Price. It would sell house brands, such as a cola drink and crackers, carrying the Leader Price brand. The cola drink tasted just like Coca-Cola, and the crackers tasted just like Ritz, but the price was a lot less than the international brands.

The French consumers loved it. Immediately, Loida saw that the potential for growth was there. While her senior management team in New York kept monitoring the numbers, she stayed in touch with the French markets in Europe. In December 1994, she proposed to the board of directors an ambitious project. She was convinced that an expansion of the convenience stores in France was the way to continue to grow the business. Close to 250 more stores were opened from 1994-1997.

By 1997, if the French minority shareholders opted to do so, they could demand for TLC Beatrice International to buy them out at multiple earnings. If the company wanted to buy their shares, TLC Beatrice International would have to pay them more expensively.

“It was a ticking time bomb,”recalls LNL. Leader Price was growing at 40% per annum. “If we waited another year in 1998 to make a decision, we would have been obligated to buy out our partners whose value would have increased by $100 million. My senior managers wanted me to sell the French business and reinvest the capital on (TLC Beatrice’s) ice cream business in Canary Island and Spain.”

But in that year, the French government passed a law that was perceived to make it virtually impossible to build a supermarket in France. A company or individual that wished to do so would have to go through an arduous legal and administrative procedure to obtain permission. This law was passed to shut out the Walmarts and the K-Marts from coming into France. Soon after the law was passed, market values for convenience-store chains like Carrefour, Promedes, Groupe Casino, and Franprix/Leader Price shot up to multiples as high as 35 times earnings.

Considering the intricacies involving tax structures and other U.S. laws, the executive management team then decided to come up with a plan that eventually led to the sale of the French business in August. The price paid: $576.1 million.

Following the sale came six months of soul searching. She recalls, “We were sitting on a tremendous amount of cash that could earn, at best, at that time, 6 percent per annum. If we were to distribute all this as dividends, under U.S. tax laws, it would have to be declared as income, and the tax on that was 40 percent for our shareholders. But, if we chose to distribute it as capital gains, the tax bite would be only 20%. Since the only way to distribute it as capital gains was if we were to voluntarily liquidate the company, it made sense then to go that route.”

Voluntary liquidation would also have meant that the shareholders could reinvest their capital into other business opportunities, without necessarily doing it all together under the TLC Beatrice International mantle.

In 1998, the bottling business was sold first; then TLC Beatrice China. In July 1999, the ice-cream business in Spain and Canary Islands was bought by the founder and minority partner. Tayto was sold in August 1999. Bireley's in Thailand was sold in 2000 to its manager.

Liquidation of the company was part of a management decision to unlock the value of the company for all shareholders. The decision meant tremendous returns for investors.

“Mr. Lewis built the rocket ship,” says Loida. “I knew where he wanted to take it and, thank God, we got there.”

Earl Graves, publisher of Black Enterprise magazine, said, “This is a model that we will continue to follow. As black entrepreneurs acquire new businesses and develop strategic alliances, they will in many instances, as evidenced by the TLC Group, sell their companies, realize capital gains and use the process to capitalize on new business opportunities.”

Just short of seven years since she took over the company, Loida Nicolas Lewis has fulfilled her late husband's vision - to create wealth. “I could not fail,” she says. “My beloved Reggie used his brain to achieve his goals. He reached the top with TLC Beatrice, but it also claimed his life. He died of brain cancer. He gave it all he had, and so did I. So how could it fail? Failure was never an option.”

This article was based on two case studies written by Regina Balane, under the supervision of Lorna Balina and Professor Ronald Chua, for the Asian Center for Entrepreneurship, Asian Institute of Management, Manila. Permission to reprint granted by Regina Balane and Loida Nicolas Lewis.