2 Investors to Push for RJR Food Spinoff : Consumer products: LeBow, Icahn say they’ll replace board if necessary. Firm has said it might split up, but not before ’97.
Corporate raider Carl Icahn is teaming up with investor Bennett LeBow in a bid to force a complete spinoff of RJR Nabisco Holdings Corp.’s food business from its tobacco holdings.
The insurgents vowed to try to replace the board if it fails to bend to their wishes.
Wall Street had been expecting that the two would form an alliance since it was disclosed late last summer that the investors were separately seeking clearance to buy up to 15% of RJR’s sluggishly performing stock.
Some analysts said Monday’s confirmation that the two men have begun buying stock and are working together would accelerate management’s timetable for separating the food and tobacco businesses.
If successful, the attempt would break apart a company that was involved in America’s richest buyout, the $25-billion deal that took RJR Nabisco private in 1989.
LeBow said he will be ready for battle if his campaign to force RJR to spin off its Nabisco Holdings Corp. unit leads to a proxy fight against the company’s directors.
“We want the spinoff,” LeBow said. “I’ll put in a board that will do it if they won’t do it.”
LeBow said he will file with the Securities and Exchange Commission this week to ask shareholders whether they support an immediate spinoff of Nabisco, the nation’s largest maker of crackers and cookies, including Ritz and Oreos.
If RJR, the New York-based maker of Camel and Winston cigarettes, will not agree to a Nabisco spinoff, LeBow said, he’ll propose a new slate of directors for the next proxy vote.
LeBow is the majority owner of Miami-based cigarette company Brooke Group Ltd., which makes the Liggett cigarette brands Chesterfield, Eve and L&M.;
The company’s New Valley unit has purchased 5 million shares of RJR.
RJR has previously said that spinning off its food interests to shareholders was an option, but said it would not undertake such a move before 1997 at the earliest.
RJR sold to the public about 20% of Nabisco Holdings stock in January but still holds the rest. Icahn and LeBow want the remainder spun off to shareholders.
“RJR clearly wants to spin off the food business,” said analyst David Adelman of Dean Witter. “This probably will move forward the timing.”
A stock spinoff rewards shareholders much as a dividend does, and can often be structured so that shareholders do not have to pay taxes on what they get.
Companies often use stock spinoffs when they are involved in more than one business and believe one business’ performance overshadows the others.
In this case, several analysts believe investors are overlooking the merits of the food businesses because of worries about potential health liability of the tobacco business.
On the New York Stock Exchange, RJR gained 75 cents to $30.75 a share and Nabisco Holdings rose 50 cents a share to $27.375.
LeBow said he and Icahn own a combined 13 million RJR shares, collectively making them the conglomerate’s second-biggest shareholder behind Fidelity Investments, the mutual fund company.
Icahn, who profited handsomely in the 1980s on investments in companies such as Texaco Inc. and USX Corp., has agreed to support LeBow in pressing for the spinoff.
