RJR Nabisco Splitting Up

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Formed just 10 years ago in a blockbuster $25 billion deal, tobacco giant RJR Nabisco is letting go of its international tobacco holdings and -- perhaps more significant -- is splitting up its food and tobacco divisions at home. Japan Tobacco Inc. is set to buy RJR's international tobacco business for $8 billion. But it's the stateside activity that's raising more eyebrows: Analysts say that by splitting its domestic tobacco division and Nabisco food group into two separate entities, the company will ostensibly create a new stock that could remain impervious to market reactions over future tobacco suits. This could invite legal challenges by those with smoking-related illnesses who see the breakup as a ploy to protect the assets of the food division in anticipation of settlements from such lawsuits. But TIME finance columnist Dan Kadlec says RJR's payout days are likely over and the spin-offs are just a long-overdue business move.

"RJR said in the past that it wanted to spin off its food unit but couldn't because of the legal quagmire it was trapped in during the tobacco suits," says Kadlec, adding that the time is long past when people could claim to have smoked without knowing the risk. "People under a certain age have no claim. The real harm is known, and there may be some suits, but this move makes good business sense. Now it's time for the company to go forward." But don't expect those with smoking-related illnesses to sit back quietly. Legal challenges are expected.