Icahn sells RJR Nabisco stock, ending his bid to split company Financier receives $732.4 million for his 19.93 million shares

February 28, 1997|By BLOOMBERG NEWS

NEW YORK -- Financier Carl Icahn said yesterday that he had sold his 19.93 million shares of RJR Nabisco Holding Corp. for $732.4 million, all but ending his 17-month attempt to force the food and tobacco company to split in two.

Icahn said investor "euphoria" over talks to settle legal claims against the tobacco industry dashed his second bid to win control of the maker of Camel cigarettes and Oreo cookies. He made about $134.5 million from the sale, not including dividends.

It isn't Icahn's first abrupt exit. He sold his 13 percent stake in USX Corp. in 1991 after forcing it to separate its steel and energy businesses. His RJR gambit wasn't nearly as successful: A spinoff of the food unit isn't imminent and he had a slim chance at replacing the board.

"He saw the futility of his effort," said Art Cecil, an analyst at T. Rowe Price Associates, which held 931,000 shares as of September.

Shares in the New York-based company fell $1.13 to $36.63 on trading of 4.58 million shares, more than triple the three-month trading average of 1.3 million.

Goldman, Sachs & Co. helped arrange the sale, which Icahn said was sold at $36.75, including commissions, after the markets closed yesterday. Icahn said in a Securities and Exchange Commission filing yesterday that he paid an average of $30 a share.

It wasn't a good investment. RJR's shares have risen 19 percent since Icahn's first disclosure in September 1995. That's far less than the 10-fold jump in the S&P 500 Index and the 70 percent increase in rival Philip Morris Cos. shares.

The announcement also is a victory for RJR Chairman and Chief Executive Steven Goldstone, who's spent much of his tenure battling Icahn and mollifying unhappy investors. Shareholders have said Goldstone won them over by meeting with them more frequently, increasing RJR's dividend and stock buybacks, boosting earnings and planning to spin off by the end of next year the 80.5 percent of Nabisco Holdings Corp. it holds.

"Shareholders still want a spinoff of Nabisco, but they don't want it badly enough that they would turn control over to someone they didn't trust," said David Drake, assistant director of research for Institutional Shareholders, which advises institutional investors on proxy votes.

Icahn also said institutional investors are satisfied with the status quo.

"It would be exceedingly difficult at this time to prevail in a proxy contest," Icahn said in the filing.

New York-based Icahn is best known for his ill-fated buyout of Trans World Airlines and takeover runs at USX and Texaco Inc. He's currently grappling with Ron Perelman over Marvel Entertainment Group.

Pub Date: 2/28/97

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