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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.

BY GENE G. MARCIAL


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Updated June 14, 1997 by bwwebmaster
Copyright 1996, Bloomberg L.P.
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