R.J. Reynolds Tobacco Holdings to acquire Nabisco Group holdings for $9.8 billion

Weekly Corporate Growth Report, Jul 3, 2000

The Deal: R.J. Reynolds Tobacco Holdings has announced that it will acquire Nabisco Group Holdings, the parent of Nabisco Holdings, for $9.8 billion, or $30 a share. In late March Nabisco's largest shareholder, Carl Icahn, made a tender offer to buy the holding company for $13 a share. Since then, the share price of Nabisco Group Holdings has risen 221 percent, at $25.5625.

Discussion: Formerly called RJR Nabisco Holdings, Nabisco Group Holdings sold its international tobacco holdings, then spun off all of R.J. Reynolds Tobacco R.J. Reynolds, the No. 2 U.S. cigarette company, is under fire from lawsuits in the U.S. Nabisco Group Holdings' sole asset is its 81 percent stake in the U.S.'s largest cookie and cracker maker Nabisco Holdings, which is being bought by Philip Morris. Under pressure from Carl Icahn, who owns about 10 percent of Nabisco Group Holdings, the company has agreed to be bought by former subsidiary R.J. Reynolds.

The No. 2 U.S. cigarette maker, R.J. Reynolds Tobacco Holdings, makes Camel, Doral, Salem, Winston, More, NOW and Vantage brands, several of which are among the best-selling in the nation. RJR also offers Eclipse, which heats tobacco rather than bums it, possibly reducing health risks. The firm's Targacept unit develops nicotine-related pharmaceuticals. RJR is buying former parent Nabisco Group Holdings. Nabisco Group, formerly RJR Nabisco, sold its international tobacco operations and spun off the domestic tobacco firm in 1999 in an effort to shield its food business from smoking-related litigation.