RJR thinks again on planned split

NEW YORK - With the tobacco industry in turmoil over an impending price war, RJR Nabisco may withdraw a plan that would split its market listing into two classes of shares reflecting its cigarettes and foods divisions, writes Larry Black.

The plan, designed to highlight the strengths of the foods division, would have raised dollars 1.5bn, the latest of a series of share offerings RJR has used to reduce debt acquired in its 1989 leveraged buyout.

But shares of RJR, America's second- ranking cigarette maker, have lost more than a quarter of their value since Friday, when the market leader, Philip Morris, announced plans to cut the price of its Marlboro brand by as much as 20 per cent.

RJR, which is controlled by the buyout specialists Kohlberg Kravis Roberts, lost its chief executive, Louis Gerstner, to IBM last month and is suffering from a bout of negative publicity in connection with the release of a cable-TV film about the 1989 buyout, Barbarians at the Gate.

Wall Street bankers close to RJR said the plan could be restructured but would most likely be postponed until the impact of the price war on tobacco earnings was clearer.