Tobacco and liquor giant American Brands Inc. said Monday that it is selling its E-II Holdings Inc. for about $1.2 billion but will buy back five of E-II's home and office products companies for $645 million.
American Brands said it was making the moves to concentrate on three new core businesses--home products, office products and hardware.
American Brands said it is selling E-II, a company that includes several non-food operations as well as a few small food units formerly owned by Beatrice Cos., to an affiliate of the privately held Riklis Family Corp. for about $950 million in cash and $250 million in preferred stock.
American Brands said it was selling Culligan International, Samsonite, Samsonite Furniture, Home Fashions, Beatreme Food Ingredients, Frozen Specialties, Lowrey's Meat Specialties, Martha White Foods and Pet Specialties to Riklis.
American Brands said it will retain Aristokraft Inc., Waterloo Industries Inc. and Twentieth Century Cos., which specialize in hardware and home products. It will also keep Day-Timers Inc. and Vogel Peterson Co., previously acquired from E-II by American's ACCO World subsidiary. These two companies specialize in office products.
American Brands said it will pay $645 million for these five companies.
American Brands spokesman Daniel Conforti said that the company preferred to report the sale and buyback as separate transactions. "There is really no way to combine them," Conforti said.
American Brands said it will buy two other E-II companies--the Stiffel Co. and Aunt Nellie's Farm Kitchens Inc.--and then sell them a short time later. "We are not including Stiffel or Aunt Nellie's in the figures because the negotiations for the sale are so far along that it will essentially be a wash transaction," Conforti said.
E-II Riklis Family Corp. also owns Rapid American Corp.-McCrory Stores and Faberge-Elizabeth Arden.
American Brands bought E-II Holdings on Jan. 31 for $1.14 billion. E-II was created in June, 1987, as an umbrella company for several non-food businesses of Beatrice Cos., purchased in 1986 for $6.2 billion by BCI Holdings Corp., an investment vehicle formed by Kohlberg Kravis Roberts & Co.
American Brands is a holding company that has had three core businesses--tobacco, liquor and financial services. It is building other core businesses in office products, hardware and home products.
In tobacco its major brands include Carlton, Lucky Strike, Pall Mall, Tareyton and Malibu cigarettes. In Britain its brands include Benson & Hedges.
Its distilled spirits include Jim Beam bourbon, DeKuyper liqueurs, Windsor Canadian Supreme Whisky, Gilbey's gin and Kamachatka vodka. American Brands' financial services include Franklin Life and Southland Life.
American Brands said Aristokraft manufactures kitchen cabinets and bathroom vanities, Waterloo is the leading maker of tool storage products and Twentieth Century is a major manufacturer of plumbing supplies packaged for the do-it-yourself trade.
Combined with American's Master Lock and Case Cutlery operations, this would give American $400 million in annual sales from home products.
"When the transactions are completed, we will have purchased five strategically important businesses, which will accelerate the development of two emerging core businesses," said American Brands Chairman William J. Alley.
American Brands acquired E-II Holdings in a Wall Street battle royal. In December, 1987, Chicago-based E-II disclosed it had a 4.6% stake in American Brands and the next month it said it might try to take over American in a deal valued at about $6 billion.
But American Brands countered with a hostile $875 million bid for E-II. The two companies eventually agreed that a friendly merger would be more beneficial to both companies than a hostile takeover and American emerged as the victor.
Since taking over Beatrice, Donald P. Kelly has sold off many of its assets, including Avis rental cars, Max Factor cosmetics, Tropicana Products and its Coca-Cola bottling operations in Southern California.