graphic
News > Deals
Icahn eyes RJR again
December 22, 1998: 7:20 p.m. ET

Icahn-led group takes 5.4 pct. stake, threatens proxy fight over spinoff
graphic
graphic graphic
graphic
NEW YORK (CNNfn) - Financier Carl Icahn is making another run at RJR Nabisco.
     The flamboyant corporate raider, who tried twice before to gain control of the tobacco and cookie giant, said Tuesday he is back for a rematch.
     In a Securities and Exchange Commission filing, an investment group led by Icahn said it had acquired more than 5 percent of RJR Nabisco for roughly $477 million and warned it would wage a proxy fight if the company's management fails to heed its call for a separation of the tobacco and food units.
     The disclosure marks the third time Icahn has taken a run at Nabisco. Icahn and Bennett LeBow, the chairman and chief executive of Brooke Group (BGL), tried to persuade RJR to spin off its Nabisco food business twice since the fall of 1995.
     The pair fought and lost one proxy fight in 1996 and were gearing up for a second in 1997 when Icahn decided not to proceed. He ultimately sold his entire 19.9-million-share stake for a reported $730 million.

Analysts said RJR's languishing stock price could give Icahn an edge this time around.
     "Shareholders have lost total confidence in management because the stock has underperformed the S&P 500 (stock index) by 45 percent," said Gary Black, an analyst at Sanford C. Bernstein.
     However, other analysts said Icahn still has a tough road ahead.
     "Icahn is going to have to be very persuasive with shareholders for those holders to abandon the company," said Marc Cohen at Goldman Sachs who follows the tobacco industry.
     Cohen said it was hard to see long-term shareholders going with an independent board of directors unless Icahn's group paid a premium to take control.
     A spokesman for Icahn was not immediately available to comment on what prompted Icahn to make another run at RJR or if LeBow was part of the latest group.
     However, in the filing, Icahn's group said the recent $206 billion tobacco settlement with a group of 46 states makes the argument for a spinoff even more compelling.
     LeBow previously claimed the company's board of directors was unwilling to shed Nabisco because they were afraid plaintiffs' attorneys would sue them for "fraudulent conveyance" -- the transfer of assets from one entity to another to avoid legal claims.
     However, with the settlement in place, Icahn's group is likely to claim RJR no longer has to worry about litigation from plaintiffs and therefore should move forward with a spinoff.
     The group includes High River Limited Partnership, Riverdale LLC, American Real Estate Holdings L.P., American Real Estate Partners L.P., American Property Investors, Inc., and Beckton Corp. All of the firms are controlled by Icahn or affiliates.
     In the filing, Icahn said the group met with Nabisco Chief Executive Steven Goldstone recently to discuss its proposal for a spinoff. However, the group said Goldstone told them he was not convinced that a spinoff was "practicable at this time."
     A spokesman for RJR said the company was continuing work towards its goal of separating the food and tobacco operations.
     "Our stance regarding the separation of the food and tobacco businesses remains unchanged," Carol Makovich said. "We continue to believe the businesses would be better off separated. We are working toward that goal."
     Icahn's reputation as a corporate raider grew in the 1980's when he attempted to gain control of Phillips Petroleum (P). He lost that battle, but he did gain control of Trans World Airways (TWA) before selling out.
     RJR Nabisco (RN) shares closed Tuesday at 30, up 1-3/4 on volume of 4.7 million shares.Back to top
     -- from staff and wires

  RELATED STORIES

Nabisco cuts 4,200 jobs - Dec. 14, 1998

RJR smoked by Russia - Oct. 22, 1998

  RELATED SITES

Nabisco

RJR Nabisco Holdings


Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney




graphic

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.