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RJR to trim tobacco unit?
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March 3, 1999: 6:52 a.m. ET
RJR Nabisco poised to sell overseas tobacco business, reports say
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LONDON (CNNfn) - RJR Nabisco, under pressure to shore up its slumping stock price, is poised to sell its ailing international tobacco unit within the next 10 days in a deal that could fetch about $6 billion, according to a published report Wednesday.
Citing people in the industry close to the deal, the Wall Street Journal said RJR was expected to strike an agreement with an as-yet undetermined buyer by March 12, the deadline for filing of proxy materials.
Among the interested parties, the newspaper reported, are Philip Morris (MO) and U.K.-based British American Tobacco (BATS), though an acquisition by either company is far from a foregone conclusion.
BAT, though rumored as the favored buyer, is said to be reluctant to take on another tobacco division so soon after its $7.5 billion buyout of compatriot Rothmans in January, the Financial Times reported.
An acquisition by Philip Morris, meanwhile, could raise the hackles of European regulators, who would likely require the company to dispose of its Western European operations on antitrust grounds, the Journal said.
RJR Nabisco's frantic search for a buyer comes as the company braces for an expected showdown with corporate raider Carl Icahn, who holds a near 8 percent interest in the company.
Following a failed proxy fight for control of the company a few years ago, Icahn may be keen to renew that battle unless RJR spins off its Nabisco food unit, the Journal said.
RJR's non-U.S. tobacco brands include Camel, Winston and Salem.
The FT said U.K. giants Gallaher (GLH) and Imperial Tobacco (IMT) have ruled out a full bid for the division but may be eyeing purchases of RJR Nabisco's regional assets.
RJR Nabisco stock has been hit in recent months by rising anti-tobacco sentiment tied largely to a flood of litigation brought against the industry by lung-cancer sufferers, and by economic crises in Russia and Asia, where demand has sagged.
RJR shares closed up ½ at 27-7/8 in New York Tuesday.
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RJR Nabisco
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