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Nabisco rejects Icahn bid
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April 3, 2000: 8:25 p.m. ET
Board calls billionaire's bid 'inadequate,' but is considering company sale
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NEW YORK (CNNfn) - Nabisco Group Holdings Corp. on Monday said it rejected billionaire corporate raider Carl Icahn's bid to take a 30 percent stake in cookie and cracker king, calling Icahn's $13 a share offer "inadequate" and "not in the best interests of the company's shareholders."
The board also directed management to consider strategic alternatives, including the sale of the company, or the sale of Nabisco Group Holdings' 80.6 percent stake in Nabisco Holdings Corp. (NA: Research, Estimates) Toward that end, Nabisco has hired Warburg Dillon Read and Morgan Stanley Dean Witter as financial advisers.
At his New York office, Icahn was not immediately available for comment on Nabisco's actions.
The Nabisco move come just days after Icahn offered to buy 100 million shares of Parsippany, N.J.-based Nabisco Group (NGH: Research, Estimates) for $13 cash apiece.
Shares of Nabisco Group rose 5/16 to 12-3/8 on Monday, while Nabisco Holdings shares rose to 32-3/8, up 1/8.
"Nabisco Group Holdings noted that Icahn's offer does not come close to reflecting the underlying value of the company's business and seeks to take advantage of the uncertainty regarding the current tobacco litigation, which has had a negative impact on Nabisco Group Holdings' stock price," the company said in a statement.
Wall Street analysts said that Nabisco's board ultimate goal is to boost the company's stock price, and unlocking the value of its assets.
Industry experts have speculated that either food powerhouses like PepsiCo Inc., which operates the world's biggest salty snacks company Frito-Lay Corp, and Philip Morris Cos. Inc., which owns Kraft Foods Inc., would make a good match with Nabisco.
"Nabisco is a very attractive entity and it would make sense for a lot of companies to merge and acquire it," said analyst Patrick Schumann of
Edward Jones. "There is speculation regarding Pepsico because it would fit in very nicely with their leadership in the salty snack area ... but you can make a case for several other food companies as well."
Nabisco's move is the latest in a chess game between Nabisco, a $8 billion holding company best known for products such as Oreo cookies, and Life Savers candy, and Icahn, who has threatened takeover bids in 1995, 1996 and 1999. Each time he withdrew his proposal before it came up for an official vote.
On March 10, Icahn announced he intended to replace the company's board with his own nine-member slate. Nabisco responded by adopting a "poison pill" shareholder rights plan, to fend off a hostile takeover.
The current bid would give Icahn, who already owns more than 31 million Nabisco shares, a nearly 40 percent stake in the company and considerable influence over its board and upcoming board elections.
Icahn gave Nabisco officials until Tuesday, April 4, to approve his purchase, eliminate the company's newly adopted poison pill defense and reschedule the upcoming May 9 annual meeting so he would be able to vote his shares.
If Nabisco's board does not meet his demands, Icahn had said a proxy fight for control of the board "is pretty much a sure thing."
In the event that Icahn commences a tender offer, Nabisco Group urged stockholders to read the company's solicitation/recommendation statement in response to that tender offer, which will contain important information. The statement would be on file and available from the Securities and Exchange Commission. 
-- from staff and wire reports
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Nabisco
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