RJR Dissidents Claim Victory on Spinoff

A dissident group of shareholders said Tuesday that it had won majority backing for its nonbinding proposal that RJR Nabisco Holdings Corp. immediately spin off its food business.

The results, if they hold up on closer examination, are a blow to the tobacco company, which had vigorously campaigned against the proposal.

RJR had said late last week that its own preliminary count showed the proposal failed to get a majority vote.

The dissidents, led by financier Bennett LeBow’s Brooke Group, said their preliminary count shows that 50.4% of RJR’s more than 281 million shares were cast in favor of the resolution for the immediate spinoff.

“Shareholders have sent an unmistakable message they want Nabisco spun off now,” LeBow said in a statement.

He said the consent forms received in the tally will be delivered to RJR Nabisco for counting by independent inspectors.

RJR said the review could take as long as three weeks. But it said whatever the results, it still believes an immediate spinoff is inconsistent with its obligation to protect its shareholders’ interests.

The tobacco company, the nation’s second-biggest with brands such as Winston and Camel, owns 80.5% of Nabisco Holdings Corp., the maker of Ritz crackers and Oreo cookies.

On Tuesday, RJR shares were down 12.5 cents at $32.625 on the New York Stock Exchange.

The debate over the spinoff revolves around timing.

Both RJR and LeBow, who along with onetime corporate raider Carl Icahn controls about 4.8% of RJR stock, said they support a spinoff of the food businesses. LeBow argues that the unit would do better in the stock market if it were freed from legal ties to the tobacco business. Nabisco Holdings has been trading separately since RJR sold 19.5% of it in an initial public offering in January 1995.

LeBow wants an immediate spinoff, while RJR argues that it should not occur before 1997. RJR says an earlier spinoff would invite legal challenges in an unfriendly legal climate for tobacco companies. It said a quick spinoff could also damage its credit rating, which affects borrowing costs.

LeBow said those are just excuses and that the company should move ahead. He said shareholders also approved a separate resolution rescinding an RJR bylaw that revoked the right of shareholders to call a special meeting. LeBow said that resolution, which will be binding once the results are confirmed, won approval from 53.8% of RJR’s shares.

He said two-thirds of the votes cast were in favor of his two resolutions. However, a share that was not voted at all would count against LeBow in his effort to get a majority of total shares.

LeBow said 21 of the 25 largest institutional shareholders voted for the immediate spinoff.

LeBow has already nominated nine candidates to the RJR board at the company’s annual meeting this year. He is expected to soon name a 10th candidate, as RJR has recently expanded its board.

RJR Chief Executive Steven F. Goldstone said in a statement that the company is taking seriously its shareholders’ message of support for a spinoff.

“We are committed to achieving a spinoff as soon as we think we can be successful, and we are working toward that goal,” he said.

In the meantime, he said, the board will examine how to strengthen the company and how to reward shareholders in other ways.