Rjr Nabisco Splits Tobacco And Food

Food and tobacco are better off apart, RJR Nabisco Holdings has concluded. Hoping to boost its anemic stock price, the debt-heavy conglomerate announced a complex share-restructuring proposal on Mar. 2 that would result in separate classes of stock tied to its tobacco and food operations. Both will pay modest dividends, the first since RJR was taken private by Kohlberg Kravis Roberts in 1989.

Since food stocks attract relatively high price-earnings multiples, RJR is hoping for better market recognition of its roster of Nabisco crackers and cookies, Life Savers, and Grey Poupon products. But with the Clinton Administration weighing big boosts in cigarette taxes to help pay for health-care reform, isolating the tobacco unit could backfire.