Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, October 31, 1995                   TAG: 9510310108
SECTION: BUSINESS                    PAGE: B-8   EDITION: METRO 
SOURCE: Associated Press
DATELINE: NEW YORK                                LENGTH: Medium

RAID IS ON AT RJR

The insurgents vowed to try to replace the board if it fails to bend to their wishes.

Wall Street has been expecting the two would form an alliance since it was disclosed late this summer that the investors were separately seeking clearance to buy up to 15 percent of RJR's sluggishly performing stock.

Some analysts said Monday's confirmation that the two men have begun buying stock and are working together would accelerate management's timetable for separating the food and tobacco businesses.

If successful, the attempt would break apart a company that was involved in America's richest buyout, the $25 billion 1989 deal that took RJR Nabisco private.

RJR has said spinning off its food interests to shareholders is an option but added it wouldn't proceed with such a move before 1997 at the earliest.

``RJR clearly wants to spin off the food business,'' said analyst David Adelman of Dean Witter. ``This probably will move forward the timing.''

A stock spinoff rewards shareholders much as a dividend does, and can often be structured so shareholders don't have to pay taxes on what they get.

Companies often use stock spinoffs when they are involved in more than one business and feel one business' performance overshadows the others. In this case, some feel investors are overlooking the merits of the food businesses because of worries about potential health liability of the tobacco business.

RJR owns the nation's second-biggest tobacco business with brands such as Winston, Camel and Salems. It also owns 80.5 percent of Nabisco Holdings Corp., the leader in cookies and crackers with brands such as Ritz and Oreos.

On the New York Stock Exchange, RJR gained 75 cents to $30.75 a share and Nabisco Holdings rose 50 cents a share to $27.371/2.

Monday, LeBow said he and Icahn own a combined 13 million RJR shares, collectively making them the conglomerate's second-biggest shareholder behind Fidelity Investments, the mutual fund company.

Icahn, who profited handsomely in the 1980s on investments in companies such as Texaco Inc. and USX Corp., has agreed to support LeBow in pressing for the spinoff. LeBow's Brooke Group Ltd. owns Ligget Group, a small tobacco maker, and the corporate successor to Western Union.

They plan to seek support from RJR shareholders in a nonbinding referendum and present the results of that vote to the RJR board with hope it would abide by the results.

Failing that, LeBow said, they would push for election of a rival slate of directors to the RJR board at the 1996 annual shareholders meeting. All nine board seats are up for election to one-year terms.