Icahn Vs. Rjr: Don't Yawn

Has Carl Icahn lost his "terror" touch? Once feared as a takeover artist, his latest threat--to wage a proxy battle at RJR Nabisco (RN) in the wake of Ben LeBow's failed attempt to replace the board--hasn't nudged the stock up at all. It has traded between 30 and 33 a share all year, and Icahn's recent purchase of additional shares (he now owns 13 million, a 4.9% stake), accompanied by a disclosure that he's determined to back a non-LeBow group to force management to spin off the Nabisco food operations, has left most investors yawning.

They may be making a big mistake, however, say Icahn associates. They say he'll use his wit and resources to emerge victorious. "It's true that Icahn may just want to bail out with a nice profit from his investment--but he can achieve more than that by battling to see that a spin-off does happen," says one of Icahn's partners. "This time, Icahn will show that he still has it: the firepower to win," he adds.

So far, skeptics are unconvinced. "We aren't recommending the stock," says Roy Burry of Oppenheimer. "It is important for Icahn to structure his move in a way that will win the confidence of shareholders," he explains.

If his intent is just to get Nabisco spun off--without linking it with an agenda such as running the company or settling tobacco lawsuits--Icahn might be able to win enough holders, says Burry. He thinks the stock should hit 40 once a spin-off is announced.

The Icahn group, to be led by a highly regarded lawyer, is banking on such big holders as Michael Price to join its campaign. Icahn is believed willing to finance a proxy fight and insists he isn't interested in a position in management or the board. So far, management has ignored Icahn's threats.

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