Icahn Splits With LeBow, Seeks Allies for RJR Spinoff

Investor Carl Icahn has split with Bennett LeBow and is looking for allies among other big shareholders of RJR Nabisco Holdings Corp. to break apart its food and tobacco businesses.

Icahn said Thursday in a filing with the Securities and Exchange Commission that he has boosted his stake in RJR from 4% to 4.8%. He also said in the filing that he disagreed with the determination of LeBow’s Brooke Group Ltd. tobacco subsidiary to settle lawsuits brought against it by or on behalf of smokers, a decision that went contrary to the rest of the industry.

Icahn’s companies “now believe that stockholders . . . would not support a settlement of the tobacco litigation, except on an industrywide basis,” the filing said.

The threat of losing a big lawsuit has been greatly diminished since a federal appeals court voided the class-action status of a nationwide suit filed in Louisiana.

LeBow, who also filed with the SEC on Thursday, said his Brooke Group will continue to press ahead with the litigation settlements.

“Carl Icahn continues to share our belief that an immediate spinoff of Nabisco is imperative,” LeBow said in a statement. “For each of us, however, having the flexibility to act independently in the future will help us achieve this goal.”

LeBow and Icahn, major shareholders in RJR Nabisco Holdings, had formed a group that had been pressing since January for the immediate spinoff of the Nabisco Holdings food unit.

They contended that an immediate spinoff would raise the company’s stock price and free the food business from litigation associated with the tobacco operations.

RJR has said it is committed to a spinoff of its 80.5%-owned Nabisco food business, but will not do it before 1997 or 1998.

Icahn said he is talking with some of RJR’s biggest shareholders and others about calling a special meeting to add enough directors to gain control of the food unit.

Icahn, a corporate raider best known for his ill-fated takeover of Trans World Airlines in the 1980s, would probably have a better chance at gaining control of No. 2 cigarette maker RJR with LeBow and his settlement out of the foreground, analysts said.

However, Icahn would still have to convince shareholders of the merits of any board he supports.

“Icahn has a decent chance of success if he gets a good board,” said Sanford C. Bernstein analyst Gary Black.

Icahn said if he does decide to act, it would be within a “relatively short period of time.”

RJR shares rose 25 cents to $33.75 in trading of 1.8 million, topping its three-month daily average of 1.4 million, while Nabisco Holdings Corp. rose 75 cents to $35.75. Shares in Miami-based Brooke Group, which LeBow used to conduct the proxy fight, fell 12.5 cents to $7.25. All trade on the New York Stock Exchange.

Icahn and LeBow said the split was mutual. Neither will pay a fee for ending the transaction.