French Firm Pays $2.5 Billion for 5 of RJR’s European Units

RJR Nabisco said Tuesday that it sold five of its European businesses to BSN, a French food and beverage company, for $2.5 billion in an effort to reduce some of its debt from a record buyout.

BSN bought the United Kingdom biscuit business of Nabisco Brands, British snack food makers Walker’s Crisps and Smith’s Crisps, the Belin Group, a French biscuit and pastry business, and Saiwa, a biscuit and snack producer in Italy.

The five European companies had pretax profit of $137 million on sales of $1.2 billion in 1988.

RJR Nabisco put the European units on the block last month, saying the sales would be part of an effort to reduce the company’s overall debt by about $5.5 billion.

In the wake of its $24.5 billion takeover by Kohlberg Kravis Roberts & Co., completed earlier this year, RJR has annual interest payments of about $3 billion.

The company has been expected to sell several assets in an attempt to reduce that debt.

Emanuel Goldman, an analyst with Paine Webber Inc. in San Francisco who follows RJR, said the BSN deal demonstrates that there should be eager customers for any RJR units made available.

“This indicates that, indeed, the RJR properties are hot properties,” he said. “It is one thing to project that, and another to actually see it.”

BSN and RJR are ranked No. 1 and No. 2, respectively, in the biscuit and snack food business in France, Goldman said, and the deal reinforces BSN’s powerhouse status at home.