Icahn Breaks Alliance With Brooke, Looks For Other Partners to Split RJR
Jun. 07, 1996
NEW YORK (AP) _ 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 percent to 4.8 percent. He also said in the filing that he disagreed with LeBow over whether RJR shareholders would break with the tobacco industry and settle liability lawsuits.
Icahn's companies ``now believe that stockholders of the Issuer would not support a settlement of the tobacco litigation, except on an industry-wide basis.''
Besides, 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.
With this suit less of a threat, Icahn said shareholders need to push RJR to ``spin-off Nabisco during the window of opportunity that now exists, but may not continue to exist.''
RJR has said it too wants to break apart the food and tobacco business, but that this is not the right time.
Icahn said his group is talking to other RJR shareholders and non-investors to form a slate of candidates who will push for a spin off of the food business to seek seats on RJR's board.
While LeBow and Icahn had teamed their total 6.6 percent of RJR to push for election of directors who would go ahead with the spin off, the effort failed largely because RJR's stock price fell after LeBow negotiated the lawsuit settlement.
LeBow, who controls cigarette maker Liggett Group, sought the settlement as a way to erase liability concerns hanging over tobacco stocks and lift the share price for RJR.
His effort backfired when RJR stock fell and ultimately led to the failure of his attempt to break the company apart.
``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.''
The tobacco industry scored a huge victory over the suit weeks ago when the Castano suit lost its class-action status. Attorneys now plan to file suits in state courts.
RJR's stock rose 25 cents to $33.75 on the New York Stock Exchange Thursday.