"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.
RJR Nabisco Splitting Up
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.