RJR Attacks LeBow in Paper Ad
RJR Nabisco Holdings Corp. struck back Friday at dissident shareholder Bennett LeBow, whose Liggett Group broke industry ranks this week in agreeing to settle lawsuits against major tobacco makers.
In a full-page advertisement in Friday’s editions of the Wall Street Journal, RJR said LeBow had wiped out $5 billion of stock market value for RJR and other tobacco-related companies in a single day with the settlement of a federal class-action lawsuit brought on behalf of smokers.
LeBow is chairman and chief executive of Brooke Group Ltd., which owns Liggett, the nation’s No. 5 tobacco company.
On Wednesday, Liggett agreed to settle the suit in Louisiana in which smokers allege cigarette makers manipulate nicotine levels to keep them addicted.
RJR owns the nation’s second-biggest tobacco company, RJ Reynolds Tobacco. It, along with other tobacco companies, has vowed to continue defending itself in the Louisiana case.
But RJR has a special interest in what LeBow is doing because LeBow and ally financier Carl Icahn together own a 6.4% stake in RJR. The two dissident shareholders are trying to unseat the RJR board next month because RJR has resisted their call for an immediate spinoff of the company’s Nabisco food interests to RJR shareholders. Such a move would separate the food and tobacco businesses.
RJR has said it favors the idea of a spinoff but that it would not consider making that move until 1997 or ’98.
In its Journal ad, RJR said LeBow “demonstrated his reckless disregard for the long-term interests of RJR Nabisco shareholders” by agreeing to the settlement.
“We believe this irresponsible ploy was intended solely for the purpose of advancing LeBow’s and Carl Icahn’s proxy contest agenda,” it said.
A call to LeBow’s spokesmen for comment on the ads was not immediately returned.
LeBow has argued that tobacco stocks could benefit in the long run if companies could put the threat of litigation behind them.
LeBow said Friday that Liggett has agreed to settle lawsuits filed by five states that want tobacco companies to help pay the costs of treating tobacco-related illnesses. “A new economic model for the industry based on responsible coexistence instead of scorched earth confrontation can substantially increase stock valuations over time,” he said.
In trading Friday on the New York Stock Exchange, RJR Nabisco rose 75 cents to close at $33.375 a share; Brooke Group was down 37.5 cents at $9.25. On Tuesday, before the first settlement announcement, RJR Nabisco closed at $34.875 and Brooke Group at $8.375.
* SECOND SETTLEMENT
Liggett to settle lawsuit involving five states. A1
