Philip Morris To Acquire Nabisco

Sunday, June 25th 2000, 12:00 am
By: News On 6

NEW YORK (AP) — Philip Morris Companies Inc. announced Sunday that it has reached an agreement to purchase Nabisco Holdings. Corp., the nation's No. 1 cookie and cracker maker, for $55 a share in cash.

Philip Morris, headquartered in New York, is the world's largest tobacco company. It also is heavily into food with its Kraft Foods subsidiary.

The announcement ended a bidding war that had involved financier Carl Icahn as well as a venture of France's Danone SA and Britain's Cadbury Schweppes PLC.

Nabisco Holdings, which makes Ritz crackers, Oreo cookies and Life Savers candy, is 80.6 percent owned by Nabisco Group of Parsippany, N.J.

Nabisco Group issued a separate statement confirming the sale.

Nabisco Group also said Sunday that after shedding the Nabisco Holdings unit in the estimated $15 billion deal, what remained of the group would be sold to R.J. Reynolds Tobacco. Ironically, R.J. Reynolds Tobacco had been a subsidiary of the group — previously known as RJR Nabisco — before it was spun off last year as a separate publicly traded entity.

Nabisco Group said the price for that deal was $30 a share.

Dow Jones News Service quoted sources close to the deal as saying that Philip Morris had agreed to pay $14.91 billion in cash for Nabisco Holdings plus assume about $4 billion in debt.

It said Reynolds will buy the holding company, ``which will become a cash-filled shell,'' for $30 a share, or $9.8 billion.

Icahn, the biggest individual shareholder in Nabisco Group at 9.6 percent, disclosed last Thursday in a federal filing that he had offered $28 a share for the company, or $8.3 billion. That bid consists of $19 in cash and a two-year note with a face value of $9 for each share. Icahn earlier offered $22 a share.

According to a filing later Thursday with the Securities and Exchange Commission, Icahn disclosed that he had informed Nabisco he could offer as much as $31 a share by boosting the face amount of the two-year note to $12. He said he could raise the extra money by arranging to ``pre-sell portions of the business of Nabisco'' to other potential buyers.

Icahn, who had made three failed efforts to replace the Nabisco Group board over the past few years, goaded the board to put Nabisco Group on the market when he suggested in late March that he wanted to increase his stake in the company to 40 percent through a $13 a share offer.

On April 3, the Nabisco Group board said it had authorized management to explore the sale of the company or its stake in Nabisco Holdings.