"I was so shocked because I didn't think the ball had enough to get out." -- Mark McGwire, after No.62EDITED BY ROBERT McNATTReturn to top
IT'S HARD TO KICK THAT RJR HABIT
CARL ICAHN LIKED BEING AN RJR NABISCO SHAREHOLDER so much he's back for another helping. The financier cleverly made a bundle last year by selling his entire 6% stake in RJR for about $731 million as the stock price peaked in the high 30s. But lately, with the price in the low 20s, he has bought back about 3%, worth about $230 million.
This time, both the food-and-tobacco giant and Wall Street believe Icahn will be a passive investor, though they caution he is unpredictable. In 1996, Icahn and financier Bennett LeBow tried to force RJR into spinning off its Nabisco division. They failed and cashed out in 1997. But their timing was right: RJR stock surged on prospects of a national tobacco litigation settlement, which later fizzled. Icahn, who isn't talking, came away with around $130 million in profits.
Now, analysts say, he's likely awaiting new attempts at a tobacco pact, which would ease RJR's lawsuit worries and encourage it to spin off Nabisco. As pure plays, the separate stock in Nabisco and tobacco would each rise, says Salomon Smith Barney analyst Martin Feldman. RJR Chairman Steven Goldstone has said he would like to divest Nabisco, but only after a settlement. Moving sooner, he fears, risks antitobacco plaintiffs' objections that he is removing assets from their grasp.EDITED BY ROBERT McNATTReturn to top
TWO JUNK-BOND STARS FEEL TRASHED
CALL IT A FINANCIAL CULTURE CLASH: Two senior managers at Montgomery Securities are so irate at their new corporate parent, NationsBank, and its takeover of Montgomery's high yield business, that they may quit, BUSINESS WEEK has learned.
Tom Weisel, Montgomery's former chairman and CEO, and Jerry Markowitz, head of its high-yield operation, are "leaning" toward leaving the megabank, says a source at the company, despite contracts that would reward them handsomely for staying. While neither man has yet made a final decision, both are said to be furious that the bank has taken the lucrative junk-bond business away from Montgomery's New York office and handed it to NationsBank managers in Charlotte, bank headquarters.
NationsBank spokeswoman Ginny Mackin declined to comment on "rumor and speculation."
The insider contends that the switch of operations violated last year's merger contract, which named Montgomery as high-yield overseer. Mackin had no comment on that allegation.
Both Weisel and Markowitz are supposedly negotiating their exit packages in this latest clash between the cultures of commercial and investment banking.EDITED BY ROBERT McNATTReturn to top
NO EXCUSES NOT TO GO TO MINNEAPOLIS
MANY TRAVELERS THINK getting a plane ticket to Minneapolis as the Northwest Airlines strike drags on is nearly impossible. But there's an airline charging $300 or less for round-trips between the Twin Cities and 16 major markets.
Sun Country Airlines is a 15-year-old charter carrier that started flying scheduled service two years ago and now stands to prosper from Northwest's woes. With $200 million in revenues, the Mendota Heights (Minn.) airline is the second-largest carrier out of the Twin Cities after Northwest, which controls 80% of that market. But Sun Country isn't in the computers of most corporate travel agents and doesn't advertise outside of Minnesota, so few know about it. Sun Country flies one or two nonstop flights daily to Chicago, Los Angeles, and New York, among other cities.
The carrier, already in the midst of expanding scheduled service, has stepped up the pace because of the strike. By March, Sun Country will fly about 100 scheduled flights a day, up 67% since earlier this summer. "The best thing that could happen to us is that people become aware of where we fly," says Lori Barghini, Sun Country's marketing director.EDITED BY ROBERT McNATTReturn to top