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RJR Nabisco Selling Del Monte Canned Business to Merrill Lynch Group With AM-Columbia

September 25, 1989

RJR Nabisco Selling Del Monte Canned Business to Merrill Lynch Group With AM-Columbia Pictures, Bjt

NEW YORK (AP) _ RJR Nabisco Inc. said Monday it had made the last major asset sale under a $5.5 billion divestiture plan as an investor group led by Merrill Lynch & Co. agreed to buy its Del Monte canned food business for $1.48 billion.

Del Monte’s senior management, Citicorp Capital Investors Ltd. and Kikkoman Corp. also are members of the investor group.

RJR Nabisco said proceeds from the sale will bring to approximately $4.9 billion the amount of money it has earned from its divestiture program.

The company began selling assets to reduce its debt following the record $24.53 billion buyout of the food and tobacco giant by Kohlberg Kravis Roberts & Co. earlier this year.

Sarah Sheckler, who analyzes RJR Nabisco for Duff & Phelps Inc. in Chicago, said the asset sales are ″proceeding well″ and that the prices RJR Nabisco has received were generally in line with expectations.

The company previously announced the sale of five European food businesses for $2.5 billion; its Chun King food division for $52 million; its Associated Biscuits International Ltd. for $44 million; and the fresh fruit operations of Del Monte for $875 million.

″We don’t anticipate that there will be any more major divestitures,″ RJR Nabisco spokesman David Kalis said Monday.

RJR Nabisco management would look at the company’s businesses individually and decide where it could make further cuts, Kalis said.

Ms. Sheckler said she expected RJR Nabisco to sell individual grocery product lines to achieve its goal of $5.5 billion.

There had been speculation that RJR Nabisco might sell its Planters LifeSavers Co., but the company apparently plans to retain the division.

RJR Nabisco had been expected to sell Del Monte’s canned food business to a group led by Citicorp Venture Capital. However, the company was forced to revamp the deal after the Federal Reserve Board’s staff expressed concern that the transaction did not comply with regulations limiting banks’ ownership of nonfinancial companies.

Citicorp was forced to reduce its stake in the Del Monte holdings because federal banking rules prohibit banks from owning more than 5 percent of voting stock and 25 percnet of non-voting stock in non-financial firms.

Businesses included in the latest sale included Del Monte Foods USA, Del Monte Foods Europe, Del Monte’s processed food business in Mexico, the Caribbean and the Far East and its pineapple operations in the Philippines and Kenya.

RJR Nabisco said it would keep Del Monte-Aylmer Canada, Del Monte’s processed food business in Venezuela, and Nabisco food businesses in Latin America that had been managed by Del Monte.

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