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Icahn sells his RJR stake
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February 27, 1997: 7:30 p.m. ET
Mega-investor unloads 19.9 million shares worth about $732.4 million
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NEW YORK (CNNfn) -- Mega-investor Carl Icahn confirmed Thursday that he sold his 7.3-percent interest in RJR Nabisco Holdings Corp. for a cool $125 million profit, abandoning his more than year-long effort to break up the giant food and tobacco company.
Icahn said in a statement that while RJR's large institutional investors "are currently satisfied with the status quo, [I am] not satisfied with the status quo."
But the investment magnate warned he might repurchase shares and launch a new attack if RJR stock declines.
Wall Street sources told CNNfn that Goldman Sachs & Co. bought Icahn's 19.9 million shares after hours at perhaps a $1.50 discount from Wednesday's closing price of $37.75. then Goldman had a dollar-off sale, offering shares to institutions at $36.75.
Icahn started buying the shares in July 1995 at about $30 per share.
Neither Goldman nor Icahn identified which party or parties bought the stock.
Analysts praised the move as a smart financial decision that will buoy the market.
"He didn't have any particular expertise in the industry with all of the legislation and … the legal issues surrounding the industry," said Martin Feldman, a tobacco analyst at Smith Barney. "This was an opportunity to get out at a nice profit."
Based on the stock price, the selloff is positive because Icahn's stake is no longer "overhanging" the market, said Roy Burry, a beverage and tobacco analyst at Oppenheimer. (168K WAV or 168K AIFF)
"It's also a positive because management doesn't have to go through the cost and distraction of having a proxy fight in the spring," Burry said.
In 1995, Icahn and investor Bennett LeBow started a campaign to get the company to break itself in two units -- one for tobacco, and one for non-tobacco businesses.
The pair maintained that a spinoff would unlock the food businesses' value, which Icahn and LeBow felt had suffered from concerns about smoking-related lawsuits that RJR has faced.
RJR has repeatedly said it would spin off the food company at what it deemed the appropriate time.
Still, Icahn dropped that effort with Wednesday's sale.
The investor said he "believes that it would be exceedingly difficult at this time to prevail in a proxy contest, adding "that the current litigation climate is not likely to improve, and, therefore, that the current board of directors may never spin off Nabisco."
LeBow continues efforts to prompt a spinoff.
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RJR Nabisco Inc.
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